* Key student loan program may end under Obama plan

* Sallie Mae calls downgrade premature, unfortunate

* Shares fall 3.3 percent in premarket trade

By Jonathan Stempel

NEW YORK, May 14 (Reuters) - Sallie Mae was downgraded to "junk" status by Moody's Investors Service, which cited concerns about the big U.S. student loan provider's ability to generate earnings and cash flow after the Obama administration asked Congress to cut subsidies to lenders.

Sallie Mae, whose formal name is SLM Corp (SLM.N: Quote, Profile, Research), criticized the downgrade, calling it "unfortunate" and "premature."

Students may obtain college loans by borrowing directly from the federal government or by taking out government-subsidized loans from private lenders.

In his 2010 federal budget proposal submitted in February, President Barack Obama called for shifting most of the nation's $90 billion of student lending into the direct-loan program, hoping to save taxpayers more than $4 billion a year.

Moody's late Wednesday lowered Reston, Virginia-based Sallie Mae's senior unsecured debt rating two notches to "Ba1," its highest junk grade, from "Baa2."