A bipartisan bill to slash interest rates on need-based federal loans by half over the next five years could help about 5.5 million students avoid thousands of dollars of debt.

If the measure to reduce rates on subsidized federal Stafford loans becomes law, the typical borrower – with an average of $13,800 in loans – could save about $4,400 in interest.

The U.S. House of Representatives passed the College Student Relief Act of 2007 356-71 last week. Estimated to cost lenders $6 billion, the bill would affect loans distributed after July 1.

Over the next five years, the interest rate would gradually drop from 6.8 percent to 3.4 percent. But in 2012, rates would revert to current levels.

At the University, 62 percent of students receive state and federal loans, and spring graduates leave college with an average of $23,688 of debt, according to the Office of Student Finance.

Elementary education sophomore Ariella DePrenger-Gottfried predicts she will be saddled with more than $20,000 in loans by graduation. The University track and cross country runner said she doesn’t have time for a job, and since her parents can’t afford to help pay for school, “it’s going to be tough” to get out of debt.

“I know that after college I am really going to have to work to pay it back,” she said. “It’s kind of scary.”

While the bulk of DePrenger-Gottfried’s loans are subsidized, many other students take out unsubsidized loans that would not be affected by the bill.

It’s only an initial step, but the legislation will make “the American Dream just a little more attainable” for millions of college students, said Rep. Tim Walz, D-Minn., in remarks on the House floor Wednesday.

“These are students I taught in the classroom, coached on the football field and trained in my National Guard unit,” said Walz, a freshman congressman and longtime high school geography teacher.

“These students are my priority, and with the passage of this bill, they will once again know that they are the priority of their government in Washington.”

But Walz’s fellow freshman, Rep. Michele Bachmann, R-Minn., called the measure “anti-student.”

“This helps the individual that’s already graduating from college, and it does nothing to address the skyrocketing costs of tuition,” she said.

“I’d rather be a part of a true solution so that more lower- and middle-income kids can get into college and stay there.”

Bachmann is joined in opposition by private lenders – who would foot the cost of the bill with increased fees and smaller profits – and the Bush administration, which stopped short of a veto threat.

In a statement Tuesday, the federal Office of Management and Budget said the bill would encourage students to take out more loans. It said the White House would rather invest in more federal grants for low-income students.

“The administration will continue to work with Congress on a comprehensive approach to improve access for the neediest students, in a fiscally responsible manner,” said the statement, which also called for universities to do more to make higher education affordable.

That’s already a strong University priority, said Chief Financial Officer Richard Pfutzenreuter, citing the University’s recent emphasis on expanding need-based assistance programs.

The interest rate bill now awaits action in the U.S. Senate, where it is expected to be considered this spring as a provision in the Higher Education Reauthorization Act.

Marcy-Holmes resident Sen. Amy Klobuchar, D-Minn., said in a statement that she supports the interest rate reduction and is looking forward to a Senate vote.

“Minnesotans have always believed that investing in higher education pays extraordinary dividends,” the statement said. “Making college more affordable for middle-class families is a major step in that effort.”

In a statement Thursday, Sen. Norm Coleman, R-Minn., said he appreciates the House’s work but would prefer a more “comprehensive approach.”

“To increase college access and affordability we need to also look at the front end, by shedding sunlight on college tuition costs and increasing the maximum Pell Grant award,” the statement said.

Beyond reducing interest rates, Sen. Ted Kennedy, D-Mass., the Senate education committee chairman, has proposed a broader relief package, including a cap on graduates’ monthly loan payments, debt forgiveness for graduates who go into public service and extending interest rate cuts to parents.

Building the rate cuts into a larger bill will make it much harder for the president to block them because he’ll likely support other provisions, said University professor Larry Jacobs, director of the Humphrey Institute of Public Affairs’ Center for the Study of Politics and Governance.

While studying Sunday at a Dinkytown coffee shop, Justin Gold, an economics junior who receives some subsidized loans, said he’s glad to see Congress take action. But he said the real work – namely, curbing rising tuition – needs to happen at the state level.

“That affects far more people than a few percentage point drop in interest rates,” he said.