A Bill approved by the United States House of Representatives economic and educational opportunities committee, will prevent legal immigrants who have not applied for citizenship from qualifying for grants or loans towards paying for college.
The measure is sponsored by William Goodling, a Republican from Pennsylvania and committee chairman, and forms part of the Republicans' plan to reform welfare in their "Contract with America". The Bill would also exclude many legal immigrants from job training and community service.
The plan is to make foreigners who live in America legally ineligible for federal Pell grants or student loans unless they have applied for naturalisation, were military veterans with honourable discharges, were on active military duty or were dependents of military personnel. Exceptions are refugees and residents over the age of 76 who have lived in the United States for more than five years.
Illegal immigrants would also be prohibited from qualifying for student financial aid.
The American Council on Education, the umbrella group for higher education in the US, has written to Mr Goodling opposing the plan. It points out that legal residents pay taxes and can be drafted into military service. Moreover they work in jobs that are important to the economy.
Without financial help, many resident aliens would be unable to go to college, the council says. "Denying legal resident aliens access to higher education would inhibit these individuals from achieving their economic potential, ironically resulting in less taxes paid to the US Treasury," it adds.