No Pre-Emption of States on Loan Policy

The Education Department told lenders last week that it would not, for now, support regulatory language that pre-empts state laws governing student-loan policy.

Many in the loan industry sought such language as the department and others drafted regulations for carrying out the mammoth student-aid bill passed by Congress last September. The industry feared the precedent set by New York State's attorney general, Andrew M. Cuomo.

Citing potential harm to New York residents, Mr.

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