Legislation currently awaiting a vote in the Senate, which calls for student loans to come directly from the government — instead of through private lenders subsidized by the government — is facing severe opposition from banks and other private lenders concerned that if the bill passes they could see their revenues plummet.

But despite the criticism of the proposed legislation, supporters, including those in President Barack Obama’s administration, are lauding the change, saying it is crucial in helping students afford to attend college. In addition supporters of the bill say they believe the student loan industry doesn’t stand to lose as much money or as many jobs as critics claim.

Mike Kantrowiz, publisher and creator of Finaid.org — a website with information on financial aid — said the legislation would help students by allowing them to go directly through their school to receive a loan, but that the bill is not without criticism.

“There has obviously been a lot of lobbying going on behind the scenes,” Kantrowitz said.

Rich Williams, higher education associate for the U.S. Public Interest Research Group, also noted that banks heavily oppose the bill because of the possibility of losing the money they receive from the government to back the loans.

“The banks, receiving all of these subsidies, really want to hold on to that money,” he said.

Thomas Kelly, a spokesman for JPMorgan Chase, said the bank has had to prepare for the possibility of the bill passing by creating a contingency plan that takes into account the potential change in the system.

“We think that ultimately what’s going to happen is that the government will be doing the direct student funding and banks will be doing private student lending,” he said.

Kelly added that recently the number of private student loans has been steadily increasing, while federal student loans have been falling.

Lisa Westermann, a spokeswoman for Wells Fargo, wrote in an e-mail statement that regardless of the proposed legislation, Wells Fargo would continue to support students in any way that they can.

“We remain committed to serving the financial needs of students and families through responsible lending of student loan products and to our team members who serve these customers,” she wrote.

In a conference call with college journalists yesterday, U.S. Rep. Timothy Bishop (D-NY) responded to critics who have said that the plan will lead to the loss of jobs within the student aid business, saying that private loan and bank programs will still be allowed to operate. He added that the loss of jobs won’t be too significant because the student aid industry isn’t very “labor intensive.”

“The direct student loan program still relies on private contractors, banks to service loans and to do some of the administration of loans,” Bishop said. “So there’s going to be work under this program, in fact there continues to be work under this direct student loan program. “

Bishop said the student aid plan requires the balancing of resources and making sure that the bill will be beneficial to both students and employees who work in the student loan industry.

“There’s no question in terms of the benefit to students, benefit to families. And because of the fact that there will still be a role for private servicers in the system, we think we’ve struck the right balance with the SAFRA law.”

Pamela Fowler, executive director for the University’s Office of Financial Aid, wrote in an e-mail interview that, for the 2008-2009 academic year, 1,833 undergraduates used private lenders for their loan needs.

Students are eligible for two types of student loans, either subsidized or unsubsidized, with the latter not based on need.

Fowler added that for the 2008-2009 year, 7,512 undergraduate students received subsidized loans, while 8,160 undergraduate students received unsubsidized loans.