The House of Representatives voted yesterday to pass what is being hailed as the largest government investment in aid for higher education.

The bill, which passed 253-171 would end subsidies for private lenders and put the process in the government’s hands. This move would save taxpayers an estimated $87 billion, according to the Congressional Budget Office, which could be used to increase the maximum annual Pell Grant from $5,550 to $6,900 over the next decade.

The measure will also shorten the Free Application for Federal Student Aid or FAFSA, the form used by colleges to determine how much a family is expected to contribute to a child’s higher education costs. The form has received much criticism for being too long and complicated.

The bill, which fulfills almost all of President Barack Obama’s campaign promises for higher education according to The Associated Press, will also create grant programs to improve community colleges and college graduation rates.

“This plan would end the billions upon billions of dollars in unwarranted subsidies that we hand out to banks and financial institutions — money that doesn’t do anything to make your loans any cheaper,” Obama said yesterday at a rally at the University of Maryland in College Park. “Instead we’re going to use that money to guarantee access to low-cost loans no matter what the economy looks like.”

Rep. George Miller (D-CA), chairman of the House Education and Labor Committee and the bill’s author, wrote in a press release that the bill will help return the United States to the top of the list of country’s with the largest proportion of college graduates by 2020 — a goal of President Obama’s.

The United States ranks behind nine other industrialized countries in the percentage of the population aged 25 to 34 that has attained a post-secondary education, according to the Organization for Economic Cooperation and Development’s Education at a Glance 2008 report.

“No student in America should have to mortgage their future to get a good education,” Miller wrote in the release. “This legislation provides students and families with the single largest investment in federal student aid ever and makes landmark investments to improve education for students of all ages – and all without costing taxpayers a dime.”

The bill now goes to the Senate, where it faces a more difficult battle, the bill’s sponsors said on a conference call with reporters Tuesday.

“Some people say it’s going to be more difficult in the Senate,” Miller said on the call. “But I think we’re relying on students and others to persuade the Senate that this is the right thing to do.”

He added: “And I think we’re going to be successful.”

Miller said despite the struggle in the Senate, he expects the legislation to be on “the president’s desk before the holidays.”

While the legislation is a historical overhaul of the higher education aid system, it doesn’t go as far as some earlier proposals from the president. Earlier this year, Obama proposed making Pell Grants an entitlement program similar to Social Security or Medicare, which would cost an estimated $117 billion.

But students shouldn’t get too excited, most probably won’t notice a large change in the aid they receive.

Students generally go through their schools to get aid, which use subsidized loan programs more often than direct government loans. Last year private lenders loaned $56 billion worth of aid to 6 million students, while only $14 billion came from direct government loans.

The vote on the bill split largely on party lines with only six Republicans voting in favor and four Democrats voting against.

Some Republicans expressed concern that the measure will cost the government more money than it will save.

“Unfortunately, the numbers just don’t add up,” Minnesota Rep. John Kline, senior Republican on the Education Committee told The Associated Press.

— The Associated Press and Daily News Editor Jillian Berman contributed to this report.

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