Washington — The U.S. Department of Education has canceled plans to conduct an auction for PLUS loans for parents of students after few lenders expressed interest in participating.

In a letter sent to bidders today, Daniel T. Madzelan, acting assistant secretary for postsecondary education, said the department had received fewer than two initial bids per state, with no bids at all in a “vast majority” of the states.

For the auction to have succeeded, the department would have had to receive at least two bids per state.

The announcement comes a little over a week after the House of Representatives passed a bill to postpone the auction, which would have awarded two-year contracts to lenders that agreed to accept the lowest subsidy rates to make PLUS loans to parents in each state.

Congress created the auction pilot program in 2007 as part of an effort to remove the politics and guesswork from the setting of subsidies for lenders.

Since then, however, the economics and politics of student lending have changed significantly. The market for securities backed by student loans has collapsed, profit margins have been squeezed, and President Obama is calling for the elimination of the guaranteed-loan program. Under such circumstances, few lenders have been willing to commit to make PLUS loans for two years.

“The auction architecture was structurally flawed. It wasn’t built to respond to the seismic shock that has shaken the capital markets,” said Peter Warren, president of the Education Finance Council.

College student-aid offices and lenders had asked the Education Department to postpone the auction to prevent disruptions to the PLUS program, which provides low-interest loans to graduate students and to parents. The auction had been scheduled to take place next Wednesday. —Kelly Field