In recent weeks, critics of the plan have also  taken encouragement from a new Government Accountability Office report that says the federal government could save money in the student loan program through other mechanisms. According to the report, the government could save $3.1 billion simply by eliminating subsidies to lenders and handling all loan consolidations through the federal government’s direct loan program.

Many students use consolidation loans to combine smaller past loans into one package at a fixed interest rate. Students currently can obtain these loans through the government’s direct loan program or through private lenders who participate in the Federal Family Education Loan Program, in which banks receive subsidies for participation and are guaranteed minimum yields based on interest rates.

“So far there has been no discussion of direct loan savings,� Swarthout says. “The entire debate is focused on how to raise additional money from students and parents.�

The debate breaks down largely along party lines on Capitol Hill, with Republicans supporting the package and Democrats in opposition. U.S. Rep. John Boehner, R-Ohio, chairman of the House Committee on Education and the Workforce, says the bill will reduce loan fees for students and raise loan limits for borrowers. In addition, the bill includes a new student aid grant program for low-income, high-achieving students.

“This proposal offers significant new benefits to students pursuing a higher education,� Boehner says.

But the senior Democrat on the House panel, U.S. Rep. George Miller, D-Calif., says the program will make college less affordable. “This bill is the largest raid on student aid in history,� he says.