A House of Representatives committee has approved legislation aimed at helping families pay for their children’s college education while cutting federal subsidies to college lenders.

The College Cost Reduction Act of 2007, H.R. 2669, introduced by Representatives George Miller (D-Cal.) and Rahm Emanuel (D-Ill.), would boost college financial aid by nearly $20 billion over the next 5 years.

The House Education and Labor Committee voted 30 to 16 to approve the legislation June 13. The bill will now go before the full House for a vote.

According to press reports, Sen. Edward Kennedy (D-Mass.) was preparing similar legislation in the Senate.

“This new investment is critically important,” Miller’s office stated in a synopsis of the bill. “College costs have grown nearly 40% in the last 5 years. Students are graduating from college with more debt than ever before. And many would-be students are holding off on going to college, or skipping it altogether, because they don’t believe they can afford it.”

Among other provisions, the legislation would boost the maximum value of Pell Grant scholarships over the next 5 years to $5,200, from $4,050. Around 5.5 million low- and moderate-income students would benefit from this increase, according to Miller.

The legislation would also cut interest rates in half on need-based student loans in stages by 2013, from 6.8% to 3.4%. Once complete, this cut would save the typical student borrower $4,400 over the life of the loan on a typical $13,800 need-based loan. About 6.8 million students take out need-based loans each year, Miller stated.

Other provisions of the act include the following:

Tuition assistance for undergraduate students who agree to teach in the nation’s public schools;

Loan forgiveness for college graduates who go into public service;

Increased federal loan limits, to cut students’ reliance on costlier private loans; and

New tuition cost containment strategies.

Allowing income-based repayment for student borrowers, capping their loan payments based on their income and cancelling their debt after 20 years.

Increasing the allowable amount working students can earn without reducing their financial aid.

Miller says the legislation would pay for itself by reducing federal subsidies to college lenders. It also includes $750 million in federal budget deficit reduction, he says.

The bill also includes proposals aimed at punishing colleges that increase their tuitions by more than twice the inflation rate and would reduce federal funds to states that cut spending on public colleges.