President Obama’s plan to federalize student loans and increase funding for the Pell Grant cleared its first legislative hurdle today when the House Education Committee approved the plan. Known as the Student Aid and Fiscal Responsibility Act of 2009, the President’s plan would expand the number of students eligible for Pell Grants. Currently 40 percent of American college students receive Pell Grant assistance. In addition, the bill would tie the dollar amount of the Pell Grant to the rate of inflation, allowing for a maximum increase from $5,550 next year to $6,900 by 2019. In order to pay for the increase in Pell Grant funding, the bill would eliminate subsidies for federal student loans by private lenders such as Sallie Mae, replacing them with direct loans from the feder...

Remember back in February, when the Finder reported on President Obama’s student loan plan – a complete revamp proposal? He plans to save billions a year by making the federal government the student lender, rather than the current system in which the fed subsidizes private lenders like Sallie Mae. He would then use some of those savings to up the amount of the Pell Grant — and the number of students eligible for this low-income grant. Well, the President’s reform plan got a major nudge on Tuesday, when Congress released its 2010 budget resolution. Both the House and Senate gave tacit approval to the president’s bump in Pell Grant funding, by creating reserve funds that would cover turning the Pell program into an entitlement — like social security. The...