The U.S. House of Representatives passed a bill last Friday that would facilitate the restructuring of the federal student loan system and potentially save taxpayers $87 billion over the next 10 years.

The Student Aid and Fiscal Responsibility Act passed by a 253-171 margin in the House and awaits a vote by the Senate. The bill, should it get approved by the Senate, would represent the most consequential piece of collegiate legislation since the Higher Education Act of 1965.

By investing $40 billion in government institutions, SAFRA aims to bolster the annual Pell Grant scholarship award amount to $5,500 in 2010 and eventually $6,900 in 2019 and direct $10 billion in savings back to the Treasury.

According to Jake Stilwell, communications director for the U.S. Student Association, federal student aid money has traditionally been transferred from the government to the hands of private banks and then distributed to students with varying interest rates and contract terms. SAFRA, however, would streamline this antiquated approach by allowing students to take loans directly from the government.

“Essentially, the bill plans to cancel the Federal Family Loan program, in which, basically, the federal government subsidizes private banks to offer student loans,” Stilwell said. “The funds would now be coming directly from the federal government, meaning much lower interest rates as well as student eligibility for income based repayment as opposed to some of the less friendly payment options from the private banks.”

Additionally, Carolyn Henrich, legislative director of education of the UC Office of Federal Government Relations, said the bill will simplify the financial aid process.

“There’s no middle man,” Henrich said. “There’s no special payment to the bank.”

According to Michael Miller, associate director of operations at the UCSB Financial Aid Office, the modification of the maximum loan dollars will prove useful to students.

“It’s a wonderful thing that we’re facing an increase in Pell Grant amounts offered,” Miller said. “Anytime more financial aid is available, it is a good thing.”

Pedro de la Torre III, the advocacy senior associate for campus progress – a student media outlet based in Washington D.C. – said the reform was originally processed through the Committee on Health, Education, Labor and Pensions and is expected to reach the Senate for a vote before the end of October, but may be stalled by deliberations on Obama’s health care reform efforts.

“Unfortunately, the timing of the student aid bill is sort of at the whims of the health care debate,” de la Torre said.

According to the Congressional Budget Office, the bill will not only save college students from sky-high interest rates, but save taxpayers $87 billion over the course of a decade.

“In numerous studies by nonpartisan governmental organizations, it’s been proven that the Direct Loan program is cheaper and more effective for taxpayers,” de la Torre said. “It’s been known for a while and with this bill, there’s a good chance that we can correct that mistake.”

Furthermore, de la Torre said, renovating the student loan process might allow more students to obtain aid and make a quality education more affordable and accessible for all.

“I think students will start seeing results as soon as the next school year,” de la Torre said. “In an early estimate by some of our coalition programs, 40 million more students would qualify for the Pell Grant than before. And on average, anyone who gets a Pell Grant will get a larger one.”