WASHINGTON (Reuters) -- The Bush administration backed away on Tuesday from a proposal to curtail a popular student loan program, saying it would look at other ways to save money after Democrats charged that the plan would make it more expensive for millions of Americans to attend college. Currently, college students can consolidate their education loans at a low, federally subsidized, fixed interest rate. But under a proposal outlined last week by the White House budget office, consolidated loans would be offered at variable rates, making them less attractive to borrowers and less costly for the government. Administration officials estimated the budget savings at $1.3 billion, enough to replenish the Pell Grant program for low-income students. But administration officials, faced with opposition from Democrats and some Republicans, conceded the proposal was going nowhere. "We're looking for other ways to fund the Pell Grant program," said one official. Democrats had warned that doing away with fixed-rate loans would penalize poor and middle-income students who depend on low-interest-rate loans to pay college expenses. "We believe strongly that our government should make it easier for low- and middle-income students to attend college, not harder and more costly," Sen. Edward Kennedy of Massachusetts and 45 other Senate Democrats said in a letter to Bush on Tuesday. "Therefore, if this proposal is put forward, we would strongly oppose it, and we urge your administration to withdraw this unwise plan."
