Gov. Arnold Schwarzenegger of California proposed today selling the state’s nonprofit student-loan-guarantee agency, known as EdFund, for about $1-billion to help ease a growing state-budget gap. The governor, a Republican, proposed the plan as part of his revised state budget for 2007-8.

EdFund administers a loan portfolio worth more than $27-billion, according to an article about the governor’s plan in the Los Angeles Times. A state budget analyst told the newspaper that legislation pending in the U.S. Congress that seeks to limit abuses in the student-loan industry could reduce the profitability of guaranteeeing loans and, therefore, could lower the market value of EdFund below what the governor’s proposal has projected.

The sale of EdFund also would deprive the state of more than $20-million in annual income from the nonprofit agency, the article said. —Sara Hebel