The Bush administration proposed to ease the budget shortfall by taking $1.3 billion from the federal student-loan program.

Opponents say the bill would prevent millions of college students and graduates from consolidating their education loans to lock in low interest rates.

The bill was proposed by White House budget director Mitchell E. Daniels Jr. as a way to ease the $100 billion federal budget deficit.

Rhonda Norsetter, UW-Madison’s director of federal relations and senior special assistant to the chancellor, said the proposal is for students with multiple loans.

“What this proposal suggests is that once a student has graduated and is thinking about consolidating their loans into one [the loans would be at a variable rate and not a fixed rate],” Norsetter said.

Under the plan, consolidated loans would be offered only at variable rates, which would make them far less appealing and save the government billions. The plan would not affect students and graduates who have already consolidated their loans; it would affect current students who have taken out multiple loans if they wish to consolidate their loans in the future.

The plan is one of three suggestions by the White House to deal with the budget deficit in the Pell Grant program and for low-income students.

Norsetter said she does not believe the proposal will pass into legislation.

“It is a proposal for one of the ways for the government to save money,” she said. “And I don’t think that it is going to pass, but it is too early to say.”

The loan consolidation program, which began in 1986, allows students who have multiple variable-rate education loans to merge them into a single loan that the government guarantees will have a fixed interest rate. The loan can then be repaid in 30 years with a capped interest rate of 8.25 percent.

Critics say that the loan program has allowed high-income college and university graduates to consolidate debts at the federal government’s expense.

Norsetter said in general people who make more money are able to pay off their loans faster.

The proposal is a particularly hot topic because, as of July 1, the interest rate on student loans is scheduled to decrease from 6 percent to 4 percent — a record low, according to the Chronicle of Higher Education.

“Student advocates say this is a chance of a lifetime for borrowers to reduce their loan costs. Those with $20,000 in loans, for example, could save up to $5,000 over 20 years,” the Chronicle of Higher Education reported.

U.S. Rep. Tammy Baldwin said the bill is unfair to families.

“Families struggling to save for their children’s college education don’t deserve another financial hit like a variable interest rate,” Baldwin said. “Young people beginning their professional lives, starting families and buying homes, are already facing a huge burden in paying off their college education.”