By Thomas Ferraro
WASHINGTON (Reuters) - President Barack Obama's stalled bid to overhaul the federal student loan program by cutting subsidies to private lenders and increasing aid to students received a boost on Friday.
Democratic congressional leaders agreed to fold Obama's student-loan proposal into a bill aimed at winning final approval of his drive to overhaul healthcare.
The House of Representatives and the Senate are expected to vote on the reconciliation legislation within the next week or so to resolve their differences over healthcare reform.
House Education Committee Chairman George Miller, a Democrat, urged passage, saying: "We must not waste this opportunity to fix America's broken health insurance system and make college much more affordable, at no cost to taxpayers."
The House passed a bill in September that would cut banks and student loan giant Sallie Mae out of a large slice of the $92 billion college student loan business, shifting most lending into a program run by the Education Department.
The measure is projected to save about $67 billion over 10 years, with the money going to increased federal grants to the neediest students as well as to other education programs.
The effort stalled in the Senate, however, amid opposition from private lenders and opponents of increasing the role of the federal government in student lending.
"It's a very bad idea," said Senate Republican Leader Mitch McConnell. "We now have the government running banks, insurance companies, car companies" and Democrats want the government to now "take over the student loan business."
Miller defended the proposed overhaul, saying the student loan program provides billions of dollars in what he described as unneeded subsidies to banks.
"We can reform the student loan program by taking these wasteful subsidies ... and redeem the savings for millions of families and students who want a shot at attending college."
(Editing by Todd Eastham)
