Around this time last year, the Congressional Budget Office exposed one of Capitol Hill's open secrets. While college students were struggling to come up with the money to cover rising tuition, the federal government was poised to fork over another $94 billion in subsidies and loan guarantees to the financial services sector for running the zero-risk Federal Family Education Loan Program (FFELP). As we noted at the time, the financial sector giveaway (which operated under the guise of "student aid") had grown so large it accounted for three-times more federal spending than student loans themselves.

In response, Congressional Democrats set out to scrap the FFEL program all together and instead process student aid through the federally-run Direct Loan Program. By closing the banking-friendly arrangement, they proposed that billions could be funneled back into Pell Grant Program, the nation's largest source of need-based aid. No thanks to Illinois' Republican delegation (save Rep. Tim Johnson), the House managed to pass a bill to do just that last fall. But after languishing for months, thanks to the threat of a filibuster in the Senate, the bill was sent along again for final passage last night as a companion piece to the health care reform reconciliation package.

Under the measure, which is expected to be approved by a simple majority in the Senate this week, Pell Grant awards are expected to rise to $5,975 by 2017 from $5,350 this year and will be adjusted annually based on the consumer price index. In all, an estimated $61 billion in savings is projected over the next decade, of which $36 billion will go right into students' pockets. Another $13.5 billion will be used to cover a shortfall in the aid program, which has grown out of increased recessionary demand. Aid to historically black and community colleges will also be marginally expanded. And the remainder will go toward filling the federal deficit.

Illinois students stand to gain another $313 million over the next decade in the form of additional Pell Grants. The House Education and Labor Committee has a nice breakdown on how each of congressional districts will fare here.

Aside from the additional grant awards, in eliminating FFEL, students will be able to avoid the private lenders' dicey loans, which have historically included high interest rates and massive late fees even though they are virtually risk-free. As regular readers may recall, returns on the loans are all but guaranteed because a provision the banking industry snuck into a 2005 bankruptcy law forbids borrowers from discharging their debt. (Illinois' own Sen. Dick Durbin and Rep. Danny Davis have repeatedly attempted to repeal.)

No thanks to Republican members of Illinois' congressional delegation, the measure now heads back to the Senate for final approval this week. Stay tuned.