A U.S. House bill touted as the most sweeping overhaul of federal student loan programs since inclusion of the GI Bill was passed last week with the Iowa delegation splitting on party lines.

HR 3221, also known as the Student Aid and Fiscal Responsibility Act, would support early childhood education and provide for “green” school building renovations. The most contentious provision of the bill, however, would end government-subsidized loans in the private sector and replace them with direct government funding. The Congressional Budget Office has estimated that removing the subsidies will save taxpayers $87 billion — monies that Democrats say can then be used to increase education grants to low- to moderate-income Americans.

According to U.S. Rep. Bruce Braley (D-Waterloo), the impact on Iowa will be enormous. His office estimates that the legislation will invest more than $726 million in Iowa over the next 10 years to increase the annual Pell Grant from $5,350 in 2009 to $5,500 in 2010 and then to $6,900 by 2019. The 1st District, which Braley represents, is estimated to receive $82.5 million.

“This bill makes federal grant money more accessible and reliable, and allows young people to graduate with less debt,” Braley said. “This is a huge step in the right direction to make higher education more affordable for Iowa families.”

Despite a highly-lauded and bipartisan amendment being attached to the legislation that removed federal funding for the Association of Community Organizations for Reform Now (ACORN), Republican support did not materialize for the full legislation. U.S. Rep. Tom Latham (D-Ames) and U.S. Rep. Steve King (R-Kiron) both voted against the legislation, even while King issued a press release in favor of the ACORN attachment.

According to Latham, the bill represents “an unprecedented government power-grab.”

“College students and their families ought to have choices when looking for ways to fund a college education,” he said. “This bill virtually forces students to rely solely on the federal government for student loan options. It threatens choice of — and access to — higher education funding.”

The bill has also received opposition from banks and other private institutions such as Sallie Mae and Citigroup that currently serve as middle-men in government-subsidized student loans — an industry currently estimated at $92 billion. Although the companies work directly with students to provide school loans, the government guarantees up to 97 percent of the loans that are made under the Federal Family Education Loan (FFEL) program, which is slated for sunset under the new legislation. The lenders, who will now begin lobbying Senate members for alternative plans, warn that loss of the program will mean loss of jobs in their sector.

U.S. Rep. Dave Loebsack (D-Mount Vernon), who supported the bill, was instrumental in the inclusion of “green school” and workforce development initiatives into the bill. Loebsack believes the provisions will encoruage greater collaboration between industry, college and workers to strengthen overall workforce development.

“The workforce development provisions will help connect community colleges to industry leaders — so that our students are receiving the most up-to-date and highly in demand skill set and our businesses are getting new corps of workers equipped to meet their current needs. By bringing everyone together, these provisions can grow and save entire industries while empowering our workforce to advance into the 21st century,” Loebsack said.

The legislation passed the U.S. House on a predominately party-line vote of 253 to 171. Although Pres. Barack Obama has already signaled his approval, members of the U.S. Senate will still need to pass their own version of the legislation.

U.S. Sen. Tom Harkin (D-Indianola), who now serves as chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, issued a press release shortly after the House vote in praising the legislation. His intention is to present a similar bill this fall.