What may be the federal government’s largest investment in higher education since the GI Bill, the College Cost Reduction Act of 2007, will be discussed this week in the U.S. House of Representatives.

The bill, which was introduced by Rep. George Miller (D-Calif.), aims to boost college financial aid by $19 billion over the next five years. The bill proposes for the federal government to cut excess subsidies paid to private loan lenders, instead of having money taken from tax money to finance the aid.

If the bill passes, the interest rates on federally subsidized student loans would be cut in half over the next five years. Students facing “economic hardship” would have their loans forgiven after 20 years. Also, among other measures, Pell Grant funding would increase by at least $500 per student over the next five years, and the annual income level of students who qualify for the grant would also increase to $30,000 – expanding eligibility, according to Rachel Racusen, spokeswoman of the House’s Education and Labor Committee.

Racusen explained that the provisions of the bill make college costs more manageable without putting a dent into a student’s career plan.

“Its about making college more affordable. By increasing the federal loan limit, we are helping in making sure that students will rely less on more expensive private loans and lessen their debt,” Racusen said. “We strengthen our work force and economy by trying to help excellent students who are interested in public jobs.”

However, American Student Loan Services President and CEO Brian Skowronski said in a press release that if the bill cut lenders’ federal subsidies, which were originally created to encourage assisting students with no credit history, it would limit the options for students to pursue financial aid.

“Since small businesses have been allowed to compete for loans with the federal government, students and families have had more choice and realized more savings,” Skowronski said. “By placing these egregious penalties on the backs of small businesses, it will force many of us to close our doors – ultimately leaving less choice and higher costs for students.”

Robert Shireman, the executive director of the Project on Student Debt, a non-profit organization that raises awareness to solutions to student debt, said that the bill benefits college students without harming private loan lenders.

“We don’t expect loan lenders to pull away from federal loan programs because the Congress is not reducing the federal subsidies much,” Shireman said. “The congress reduced only a small portion of the federal subsidy that is seen as a fat in the system.”

Shireman also added that Skowronski may have criticized the bill because the company wants more profits.

“Because they always want more and they always said that this is not profitable. But there is indication from industry analysts that loan lenders do have healthy levels of profitability,” he said.

Student Government Association President Andrew Friedson said he supports the bill.

“It’s not only important for students, but for everyone and the society,” said Friedson, who along with other SGA members has testified to the Department of Education in support of similar measures.

“It is important that we keep pressure on elected officials to pass the increases in loans and grants to budget reconciliation and to continue to pursue ways to make college more affordable for students and their families,” Friedson added.

A bipartisan vote within the Education and Labor Committee approved the legislation in a 30-16 vote in mid-June. The House will vote on the bill next week.

Contact reporter Charles Kunapermsiri at newsdesk@dbk.umd.edu.