The U.S. House voted Thursday in favor of the biggest overhaul of college aid programs since their creation in the 1960s. The bill would oust private lenders from the student loan business and put the government in charge.

The vote fell largely along party lines, 253-171, with U.S. Reps. Mike Michaud and Chellie Pingree, Maine Democrats, voting in favor. Spokespersons for U.S. Sens. Olympia Snowe and Susan Collins said neither had taken a position on the bill, which will go next to the U.S. Senate for a vote.

The measure ends subsidies for private lenders, boosts Pell Grants for needy students and creates a grant program to improve community colleges, among other things.

Ending loan subsidies and turning control over to the government would save taxpayers between an estimated $47 billion and $87 billion over 10 years, according to the Congressional Budget Office. Lawmakers would use that money to help make college more affordable, increasing the maximum Pell Grant by $1,400 to $6,900 over the next decade.

It also would be spent on new construction at K-12 schools and new preschool programs.

Republicans argued it is wrong to put the government in near-total control of student lending and that there wouldn’t be savings. Many also worry about job losses in their districts.

Reaction in Maine was mixed.

“Certainly, there are some parts of it (such as increased Pell grants) that we think would be terrific, and some parts of it that we are very concerned about,” said Beth Bordowitz, chief executive officer for the Finance Authority of Maine.

“For years, banks and lenders competed on providing students the best service and good terms; now it’s all going to be set by the federal government. It’ll be one-size-fits-all,” Bordowitz said. “No more shopping around; no more competition to provide better service and a better deal for students.”

FAME acts as a guarantor on the Federal Family Education Loan Program, a role that wouldn’t be needed under the proposed changes and could affect outreach efforts, she said. FAME hosts financial aid nights for parents and has counselors who work with students at risk of defaulting.

FISC in Lewiston is the only company in Maine servicing federally guaranteed student loans for FAME, credit unions and banks. Senior Vice President of Operations Jill Parker said 18 of its 96 employees oversee $140 million in federally subsidized student loans.

“If this does become law and the (Federal Family Education Loan Program) is terminated, that will have significant impact on us,” Parker said.

Students would lose the local resource and the security of knowing that their loan and paperwork was being handled locally, she said.

“We want to ensure that (the congressional delegation) understands that this could impact jobs right here in Lewiston,” Parker said. “If the program is terminated and we don’t identify some other opportunity, this will no doubt result in lost jobs.”

Helen Pelletier, spokeswoman for the Maine Community College System, said figures were still coming in but that system officials were pleased with an amendment added to the bill by Pingree. The amendment would undo a measure that would have prevented community colleges that received stimulus funds from having any of this new money for repair or renovation.

In a press release, Pingree’s office estimated that Maine community colleges would be eligible for $5.9 million.

It would be money for “badly needed renovations at a time when we’re using every square inch of available space,” Pelletier said.

A second amendment offered by Pingree that added towns affected by base closures as eligible for funds to help K-12 schools was also accepted.

“This is a crucial step toward rebuilding the Maine economy,” she said in a statement.

A statement from Michaud noted that $750,000 a year for five years could come to Maine for the College Access Grant Challenge Program.

“The changes will help Maine students get the training and education they need in order to make a good living and contribute to our economic recovery,” he said in a statement.

Last year, private lenders in the United States made $56 billion in government-backed loans to more than 6 million students. The federal government made $14 billion in direct loans.

The Associated Press contributed to this report.
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