By JIM KUHNHENN
Associated Press

WASHINGTON - The Democratic-controlled House voted overwhelmingly to cut interest rates on need-based student loans Wednesday, steadily whittling its list of early legislative priorities.

The legislation, passed 356-71, would slice rates on the subsidized loans from 6.8 percent to 3.4 percent in stages over five years at a cost to taxpayers of $6 billion. About 5.5 million students get the loans each year. Though clearly popular, the legislation sparked a debate over where to set the nation's education priorities -- helping college graduates pay off their debts or expanding federal grants for low-income students.

Democrats conceded Congress needs to do more to make college more affordable. But they said reducing student-loan rates was a significant step toward tuition relief.

''Many young people find themselves where I was when I was at age 18, wondering what they will do with their lives,'' said Rep. Linda Sanchez, D-Calif., who is still paying off her student loans. ``To those students, . . . the prospect of student-loan debt is frightening.''

Rep. Debbie Wasserman Schultz, D-Weston, and Rep. Kendrick Meek, D-Miami, said at a press conference Wednesday that the proposal could affect more than 100,000 students in Florida. Wasserman Schultz called the measure a ''first step'' toward making college more affordable.

''This is the beginning of helping our next generation compete in a global economy,'' Meek said.

The Bush administration opposes it, and Senate Democrats plan to bring up a more comprehensive bill that could complicate its prospects.

The House bill aims to reduce the $6 billion cost by reducing the government's guaranteed return to lenders that make student loans, cutting back the amount the government pays for defaulted loans and requiring banks to pay more in fees. Lending institutions opposed the bill.

''A strategy of raiding a financial-aid program to fund modest proposals is inadequate to the challenge,'' said Kevin Bruns, executive director of the America's Student Loan Providers, a group that represents leading lenders.

While the legislation matched the Democrats' pledge to pass a student-loan measure in the first 100 hours of legislative action by the new Congress, it fell short of their broader goal of lowering interest rates for parents who take out college loans for their children. During the 2006 Congressional campaigns, Democrats also said they wanted to increase the maximum Pell grant award from $4,050 to $5,100. Pell grants go to the neediest students and do not have to be paid back.

''We want to increase the Pell grant,'' said Rep. George Miller, D-Calif., chairman of the Education and Labor Committee. ``We hope to be able to enlarge the tax deductions for parents paying for tuition.''

Republicans argued that Democrats had chosen a politically expedient way to make good on a campaign promise instead of finding ways to increase federal college grants to help the poor meet rising college tuition. Still, 124 Republicans voted for the bill.

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