A federal bill that’s expected to reduce college costs for millions of students by cutting interest rates on loans and awarding more grants received the support of Maine’s two congressional representatives Wednesday.

The $18 billion cost of the bill over five years would not be paid by taxpayers; it would be covered by cutting federal subsidies to lenders.

The bill passed in the House by a vote of 273-149. “There was strong bipartisan support,” said U.S. Rep. Mike Michaud, D-Maine.

Michaud and U.S. Rep. Tom Allen, also a Democrat, voted for the College Cost Reduction Act of 2007, which both described as the largest single investment in college financial aid since Congress passed the GI Bill in 1944.

The act would cut interest rates for federal student loans from 6.8 percent to 3.4 percent over five years; increases Pell Grants by up to $500 a year; and forgives outstanding loans in some circumstances.

Michaud called the bill “significant” and an historic opportunity to help college become more accessible to people. “Too many Maine students do not attend postsecondary education because they can’t afford it,” he said.

The legislation would help low- and moderate-income college students. “It’s $18 billion over five years,” he said. “That’s a huge increase.”

The bill reduces the average four-year student loan debt by $4,400 for more than 21,000 Maine students, Allen said in a prepared statement.

“Like the GI Bill, the College Cost Reduction Act will open the gateway to a college education and the opportunities that creates for millions of Americans while providing much-needed relief from education loan debt to students and their families,” he said.

Proponents argue that the bill pays for itself by cutting taxpayer subsidies by $19 billion to lenders in the college loan industry. The lending industry opposed the bill.

The House version of the bill also includes about $1 billion to reduce the national deficit.

The legislation would also help keep student borrowers from facing high levels of federal student debt by guaranteeing that borrowers will never have to spend more than 15 percent of their annual discretionary income on loan repayments, and by allowing borrowers in economic hardship to have their loans forgiven after 20 years.

A similar bill sponsored by Sen. Ted Kennedy, D-Mass., is in the Senate.

It was not clear Wednesday whether Sens. Susan Collins and Olympia Snowe, both Republicans, would support Kennedy’s bill. Collins is reviewing the legislation, her spokesman, Kevin Kelley, said. Both Collins and Snowe have supported increasing Pell Grants.

When the House bill reaches the conference committee in the Senate, “My understanding is there will be provisions to help protect small lenders,” Michaud said. “We’ll be able to work out the differences.”

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