According to the story in today's Washington Post, people at the NYT say everyone just assumed Blair had graduated from the University of Maryland.
According to that story also, Raines and other senior editors were considering giving Blair a big promotion shortly before the scandal broke:
Raines and his senior editors, meanwhile, were so impressed with Blair's seemingly far-flung reporting that they discussed giving him a permanent spot on the coveted national staff. "Here was a guy who had been working hard and getting into the paper on significant stories," Raines told the Times. But Roberts balked, saying he told Boyd that Blair "works the way he lives -- sloppily."