WASHINGTON -- A new General Accountin Office study estimates that giving colleges the responsibility for making and serving student loans and eliminating the role of banks in such transactions could save the federal government more than $1 billion a year.

The GAO's endorsement of the so-called direct-loan approach comes as the House Education and Labor Committee prepares to vote this week on a controversial measure that would eliminate the existing system of federally guaranteed bank loans to students by July 1, 1996, and set up in its place revolving loan funds administered by colleges.

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