Among President Obama's attempts to pass far-reaching liberal legislation this year, his signature plan to overhaul the way students receive college loans has probably received the least attention. Yet, right now, it's arguably the issue on which Obama is closest to achieving an unvarnished success.

Last month, taking cues from Obama, the House of Representatives passed the Student Aid and Fiscal Responsibility Act, which would alter the way the government funds Pell Grants and other student loans. Under the current system, the government gives banks huge subsidies to encourage them to lend to students. Effectively, this means the government is bribing banks to extend student loans by handing them money and letting them cream huge profits off the top. It is a vast waste of taxpayer money, since Uncle Sam could accomplish exactly the same thing by cutting out the middleman and lending directly to students.

Now, after decades of congressional opposition, the House bill would eliminate banks' involvement: By next summer, federal loans would go directly from the government to students. The plan would save a gross $87 billion over ten years--$40 billion of which would be used to expand Pell Grants and permanently index them to the cost of inflation (plus 1 percentage point), and another $10 billion of which would be used for deficit reduction.

The next hurdle is the Senate, where Tom Harkin's HELP Committee plans to introduce a student loan bill as soon as it's cleared some *ahem* backlog on health care reform. It looks as if Harkin's committee will introduce a bill that, like the House version, hews very closely to President Obama's proposals as well. And, since the bill is moving through the notorious budget reconciliation process instead of the normal legislative track--a decision made by Obama's allies who want to increase the likelihood of passage--it will pass through no other committees, save the quiescent Budget Committee, and it will not face the threat of a filibuster.

Game over? Not quite. In a testament to the sway that student lenders exercise over the Senate, it's not clear that Democrats have the 51 votes necessary to pass the bill in its current form. Ben Nelson, the staunch friend of lending companies, is against it--as are Blanche Lincoln, Mark Begich, Jeff Bingaman, and Tom Udall. And Senators Bob Casey, Arlen Specter, Bill Nelson, Mark Warner, Jim Webb, and Mary Landrieu are all said to be wavering because their states contain student loan companies. Many are searching for a way to keep lending companies involved in the process--an anguished Senator Casey even held a field congressional hearing in Philadephia this week, hoping to clarify his thoughts on the issue--and they'll be tempted to back some of the numerous pro-lender amendments that will be offered once the bill is open for floor debate. (Even in the House, Democrats couldn't prevent a mass revolt until they watered down the legislation by exempting existing state-based non-profit lenders from subsidy cuts.)