Warnings On Student Lenders Unheeded

Bush Aides Derailed New Rules in 2001

By Amit R. Paley

Washington Post Staff Writer
Tuesday, May 1, 2007; Page A01

The Bush administration killed a proposal to clamp down on the student loan industry six years ago following allegations that companies sought to shower universities with financial favors to help generate business, according to documents and interviews with government officials.

The proposed policy, which Education Department officials drafted near the end of the Clinton presidency and circulated at the start of the Bush administration, represented an early, significant but ultimately abortive government response to a problem that this year has grown into a major controversy.