Washington gains dominant Role in Students

[THE MATRIX]

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WASHINGTON (CNNMoney.com) -- The House voted 220-211 on Sunday to make Washington the one-stop-shop for cheap student loans and to boost funding for need-based scholarships.

While approving the overhaul of health care, the House also voted along party lines on another of President Obama's top priorities: cutting out bank middlemen who collect subsidies to make education loans guaranteed by the federal government.

"Tonight's vote in the House is an important first step towards a big victory for America's students," Secretary of Education Arne Duncan said in a statement.

The proposal was included in the so-called reconciliation bill before the House. The Senate will take up the bill in coming days.

Under the plan, nearly all federally-backed student loans, like Stafford loans, would come straight from the government. The new system would start in July and the government would make approximately $500 billion in direct loans loans in the first 10 years, according to a Congressional Budget Office estimate.

"With this one move, we can make college more affordable, keep jobs in America, prepare young people for our global economy and reduce our deficit by billions," said Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee in prepare remarks.