Early Wednesday evening, the House passed the College Student Relief Act of 2007 [3], a bill which would reduce the interest rate on subsidized federal Stafford Loans from 6.8 to 3.4 percent over a five-year period. The bill, sponsored by House Committee on Education and Labor [4] Chairman George Miller [5] (D-Calif.), passed by a vote of 356-71. With its passage, the Democratic-led House successfully passed five of its six “first 100 hours” initiatives.

The bill gradually decreases the rate on subsidized federal loans until 2011, when it hits a temporary low of 3.4 percent for a six-month period. Once that period is up, the rate will revert to 6.8 percent unless future legislation dictates otherwise. U.S. PIRG, the federation of nonprofit state Public Interest Research Groups, has estimated that the bill would save the average four-year college student starting school in 2007 with subsidized Stafford Loans about $2,280 over the life of his or her loans. While Chairman Miller applauded the bill’s passage, he said that he hopes Congress will act on additional legislation concerning student financial aid. He supports an increase in the maximum federal Pell Grant from $4,050 to $5,100, as well as an examination of university efforts to control rising tuition rates.

Some opponents of the bill have argued that it fails to make college education more accessible, for borrowers will not see changes until they have already completed college. In addition, the Bush administration has released a statement in opposition to the bill, arguing that it may actually encourage students to take on additional debt. It states, “Student debt loads have soared in recent years, and it is not clear that encouraging more loans is a wise course.” Unlike the administration’s response to House legislation expanding stem cell research [6] and allowing the government to negotiate drug prices [7] for those enrolled in the Medicare benefit, the statement did not include a veto threat.

Before the bill reaches the president's desk, it must first be approved by the Senate. There, Majority Whip Dick Durbin [8] (D-Ill.) has introduced a similar version of the legislation. Sen. Ted Kennedy [9] (D-Mass.), chairman of the Senate Committee on Health, Education, Labor, and Pensions [10], however, plans to pursue a broader bill which would halve interest rates on more than just Stafford loans, raise the Pell Grant limit to $5,100, cap federal student loan payments at 15 percent of a borrower's discretionary income, forgive student debt for those engaged in public service careers, and encourage schools to use the government's Direct Loan Program.

Congresspedia has created a page on student financial aid legislation [3]. Check if for updates or edit it yourself if you have more information.