The House of Representatives on Sept. 17 passed legislation that expands federal aid to college students while ending federal subsidies to private lenders, reports the New York Times. By shifting to direct federal lending, the Obama administration says it can save more than $80 billion over 10 years, which would go into higher Pell grants for low-income students, new investments in community colleges, early-childhood programs, and other education efforts. The House vote was 253 to 171. The measure, called the Student Aid and Fiscal Responsibility Act, now goes to the Senate, where Democratic leaders expect it to pass. Under the current program, the government pays subsidies to lenders and guarantees the loans. All colleges would be required to convert to the federal Direct Loan program by July 1, 2010. The legislation also provides $40 billion to increase the maximum annual Pell grant scholarship to $5,550 in 2010 and to $6,900 by 2019, up from $5,350 now. Starting in 2011, the amount of the scholarship will be linked to the cost of living, rising along with the Consumer Price Index, plus 1 percent. The bill also includes about $10 billion for community colleges, some for workforce training programs and some for construction–an unprecedented federal investment in these schools. And it includes provisions to strengthen the Perkins Loan program and cut down the number of questions on the Free Application for Federal Student Aid. Democrats said the bill would save enough to finance the new programs and still leave $10 billion to return to the Treasury, while Republicans called the legislation a "massive entitlement spending spree" that would add to the deficit, not reduce it…

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