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The present paper updates the World Bank's interpretation of education development and outlines a policy framework for lending for education. After chapters on the relationship between education and development and on the state of education development, the paper devotes a chapter to each of five issues: the expansion and equalization of educational opportunities, the internal efficiency of education systems, the relationship between education and work, the administration and management of education systems, and the costs and finance of education. Subsequent chapters examine external aid to education, review the World Bank's policies and program in lending, and consider the future policies and program of the bank. The policy framework of the bank is outlined in five principles that reflect the five issues discussed earlier. Extensive tables are appended. (IRT)