But skeptics warn the rate reduction also could lead to cuts in other programs that assist students, and could reduce competition among loan providers in a manner detrimental to anyone taking out a loan.

HB5, which passed the U.S. House 356-71 earlier this month, would incrementally reduce the interest rate on subsidized federal loans from 6.8 percent until it reaches 3.4 percent in 2012.

The measure would cost taxpayers an estimated $6 billion, and many in the financial aid sector worry other budgets may be cut to pay for the lower interest rates, which still must be approved by the Senate.

"From a student standpoint, lower interest is always a positive," said John Curl, director of financial aid at the University of Utah. "From the taxpayer standpoint, I look at where the funds coming from and what the cost of those funds is."

He worries programs such as the Supplemental Education Opportunity Grant Program and the Pell Grant Program will be cut to pay for the costs of the bill. Both programs help the neediest of students pay for college.

He is concerned HB5 ultimately may make higher education unobtainable for some.

"In the worst-case scenario, students who are debt-adverse won't come because the only option will be loans," he said. "This program could take away access to other grants."

For their part, lenders say they make a small profit on subsidized federal loans, about 1/2 cent per dollar loaned on federal subsidized loans. The bill aims to reduce the $6 billion cost by reducing the government's guaranteed return to lenders that make student loans, trimming the amount the government pays for defaulted loans and requiring banks to pay more in fees.

If lenders make even less from the loans than they do now, fewer will be willing to provide loans.

Tom Joyce, spokesman for Sallie Mae, said the bill will hurt the competitiveness of loan organizations and the benefits to students.

"With fewer lenders to compete, service and benefits go down," he said.

However, Joel Bauman, vice president for enrollment at Westminster College in Salt Lake City, sees lenders' arguments as tactics "to put pressure on the legislation."

"I don't see the negative impact on lowering costs to students and families," Bauman said. "Anything that reduces loan debt is a good thing, with the caveat that it doesn't result in cuts to grant programs."

Still others argue HB5 ignores the "real" issue driving students away from college - rising tuition costs.

"It's like saying it's just outrageous to pay $4 for a cup of coffee, so, we decide to make the paper manufacturer cut his price in half. Now the price of coffee is $3.90. Have we made an impact, yes. But has it really made any difference? No. We haven't gotten to the root causes," Joyce said.

Rep. Rob Bishop, R-Utah, agrees.

He and some fellow Republicans argued that Democrats had chosen a politically expedient way to make good on a campaign promise instead of finding ways to increase federal college grants to help the poor meet rising college tuition.

"It is a whoop-de-do bill," Bishop said. "But, to be honest, what it does for my kids in college is nothing. What it does for the friends of my kids in college is nothing. What it does for the students I taught in high school and are still in college is basically nothing when it could have done so much more."

Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee, does hope to do more.

"We want to increase the Pell grant," from $4,050 to $5,100, he said. "We hope to be able to enlarge the tax deductions for parents paying for tuition and the cost of college beyond that."

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* THE ASSOCIATED PRESS contributed to this story.

At a glance

U.S. legislation would incrementally cut student loan rates from 6.8 percent to 3.4 percent by 2012. What would HB5 do?

* HB5 would incrementally lower subsidized loan rates from 6.8 percent to 3.4 percent by 2012

What are possible benefits?

*Students could save thousands of dollars in student loan repayments, making earning a higher education less of a financial burden.

What are some concerns?

* Lending companies say they will make less when offering the loans, possibly reducing the number of lenders who provide federally subsidized loans. They argue the lack of competition could lead to worse customer service and fewer benefits in repayment.

* Those in the financial aid sector say the $6 billion the lower rates would cost the government would be better spent on federal grants, such as Pell grants, which don't need to be repaid.

* Others also argue the bill does not address skyrocketing tuition costs.