The Bush administration is considering taking action that could put the final nail in the coffin of a regulatory bureau that oversees for-profit colleges in the state of California.

California state officials have asked the U.S. Education Department to determine whether students at for-profit colleges would remain eligible to receive federal student aid if the officials do not extend the law that governs the Bureau for Private Postsecondary and Vocational Education, which is set to expire on July 1, 2007.

In September, Gov. Arnold Schwarzenegger, a Republican, vetoed a bill approved by the state Legislature that would have provided a one-year extension for the bureau. Echoing concerns expressed by leaders and lobbyists of for-profit colleges, Mr. Schwarzenegger said the bureau had fundamental flaws.

The governor’s move was risky, though, because it has long been believed that if the bureau, which legally authorizes for-profit colleges to operate in the state, was closed down, those institutions would no longer be eligible to provide federal aid to students. The Higher Education Act, the law that governs most federal student-aid programs, requires that colleges be “legally authorized” by states in order to award aid.

However, lobbyists for proprietary institutions have started questioning that interpretation of the law and have urged state officials to seek guidance from the Education Department.

Steven Finley, an official in the department’s office of general counsel confirmed in an e-mail message that the issue is under review.

Officials with consumer-watchdog and legal-aid groups that advocate for students worry that the Bush administration, which has received strong financial support from for-profit higher-education companies, will endorse the proprietary institutions’ interpretation of the law. Should the department take such a stance, policy makers in California will have little incentive to extend the life of the bureau, they say.

“It’s obvious that the fix is in at both the federal and state levels,” said Elena H. Ackel, a senior lawyer at the Legal Aid Foundation of Los Angeles. “If department officials issue the opinion that they are contemplating, it will show that they have not only misinterpreted the law, but also don’t care one whit about the students and taxpayers who will surely be harmed.”