Washington — The bad news for the student-loan company OneSimpleLoan is that the U.S. Supreme Court refused today to consider its lawsuit against the Education Department over the company’s right to issue consolidation loans.

What passes for good news may be that the Florida-based OneSimpleLoan, like many lenders affected by federal subsidy cuts and the overall economic downturn, doesn’t even write consolidation loans anymore.

The case dates to 2005, when Congress passed legislation, known as the Deficit Reduction Act, containing a provision that barred a practice called “cross consolidations.” Students typically consolidate their loans after graduation, combining several federally guaranteed loans from each year of college into a single loan. Under cross-consolidation, private lenders such as OneSimpleLoan often signed up students who already had consolidated their loans through the government’s own direct-loan program.

The 2005 law forbade such cross-consolidations from the direct-loan system into the competing bank-based system. OneSimpleLoan sued, asserting that the 2005 law was technically invalid because both houses of Congress did not pass completely identical bills, citing a clerical error in an unrelated provision on Medicare. OneSimpleLoan also argued that the Education Department carried out the provision on cross-consolidations three months too early.

Lower courts ruled against OneSimpleLoan, and the Supreme Court today declined to review those decisions.

OneSimpleLoan’s president and chief executive, Paul J. Simino, nevertheless is claiming victory, saying the publicity generated by his lawsuit had helped persuade Congress to repeal the “single-holder rule” in 2006, thereby allowing any lender to consolidate a student’s loans through the federally guaranteed program — not just one of the lenders holding one of the student’s original loans.

At the same time, Mr. Simino acknowledges that his company no longer even pursues the once-lucrative loan-consolidation business because the combination of last year’s federal subsidy cuts and the overall credit crisis has left few lenders finding the consolidation business to be profitable.

OneSimpleLoan and other lenders hold out hope that the federal government might take steps to restore profitability to student lending. In the meantime, Mr. Simino concedes, the lawsuit looms as a wasted effort. “For now,” he says, “it is.” —Paul Basken