Washington — The U.S. Education Department is proceeding with plans to use an auction to set student-loan subsidies for PLUS loans, ignoring pleas from financial-aid offices to postpone it.

In a notice published on Monday in the Federal Register, the department asked the Office of Management and Budget to approve its auction bidding forms promptly, so the agency can meet a Congressionally imposed deadline of choosing winners by July 1. Congress created the pilot auction in 2007.

Under the auction, lenders will bid for the right to originate PLUS loans at all the institutions in a given state. The two lenders that agree to accept the lowest federal subsidies will “win,” earning the right to make loans in that state for two years.

Publication of the notice comes two weeks after the National Association of Student Financial Aid Administrators sent a letter to Rep. George Miller, a California Democrat who is chairman of the education committee, asking him to delay the auction to prevent disruptions to the PLUS program, which provides low-interest loans to graduate students and to parents. The association had feared that the department would not complete the auction in time for colleges to award the loans for the coming academic year.

With the department forging ahead, the question now becomes whether any lenders will bid. Many lenders now rely on federal bailout dollars to make new loans; when that money runs out, at the end of the next academic year, they might struggle to finance PLUS loans.

And by the time the auction process is complete, it could be moot. President Obama has called for abolishing the guaranteed-loan program altogether. If Congress approves the plan, there will be no need to set subsidies because there will be no banks to subsidize. —Kelly Field