House Education and Labor Chairman George Miller, D-Calif., said Thursday that President Bush will sign legislation that would cut roughly $20 billion from lender subsidies and use the funds to beef up aid to college students and reduce the interest rates they must pay on their loans.

Miller said Education Secretary Margaret Spellings told him of Bush’s intent. The administration earlier had threatened to veto the legislation (HR 2669) based on several provisions that remained in the conference agreement reached Wednesday.

According to Miller and Senate aides, the Senate is expected to pass the bill Thursday night and the House will clear it Friday. The House Rules Committee scheduled action on the conference report at 3 p.m. Thursday.

The bill would halve interest rates on subsidized student loans, from 6.8 percent to 3.4 percent, over four years; create several new programs; enact a different “special allowance payment” — the subsidy the government pays lenders to offer student loans — for nonprofit lenders; increase funding for Upward Bound; and require the Education secretary to auction the rights to offer federally backed PLUS loans to parents.

If Bush signs the measure, most of the changes will take effect Oct. 1.

They also include a $1,090 increase in the maximum Pell grant award over five years, debt forgiveness after 10 years for certain public-sector employees in the direct loan program and income-based repayment that would cap payments at 15 percent of discretionary income.