House Democrats announced their plan today to cut student loan interest rates in half. 

To hold down costs, the lower rates would be phased in.  The rate would fall from 6.8 percent today to 3.4 percent by 2011.  The lower rates are limited to subsidized loans for low- and middle-income undergraduates.

The lower rates will save an average student at a four-year college $4400, according to an analysis released today by PIRG.

Nonetheless, the plan still costs about $6 billion over five years.  It's unclear whether Democrats will include offseting budget cuts in other areas (such as lender subsidies).

Republicans have criticized the plan, arguing that the Democrats should reduce the amount borrowed rather than its interest rate.  Some college lobbyists seem to believe that the money would be better spent on Pell scholarships for low-income students. 

The House leadership has scheduled a vote for January 17th.