Student loan deal reached by senators, reports say

7:22 PM, Jul 17, 2013   |    comments
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By Michael Winter, USA TODAY

A bipartisan group of senators has struck a deal to keep student loan interest rates lower for the next two years, though rates would likely rise thereafter, congressional sources reported Wednesday night.

A vote could come Thursday or be pushed back to the middle of next week, Republican and Democratic aides told the Associated Press. They insisted on anonymity because they were not authorized to discuss the ongoing negotiations by name.

Politico also reported the deal. NBC News' Kelly O'Donnell tweeted that a "framework" was in place, but negotiations remained ongoing.

On July 1, rates for new subsidized Stafford loans doubled, from 3.4% to 6.8%.

Under the deal, all undergraduates this fall would borrow at 3.85% interest rates. Graduate students would have access to loans at 5.4% and parents would be able to borrow at 6.4%.

The lower rates would prevail through the 2015 academic year, then climb above where they were when students left campus this spring, AP writes.

Rates for undergraduates could be as high as 8.25%, and up to 9.5% for graduate students. Parents' rates would be a maximum of 10.5%.

The deal was estimated to reduce the deficit by $715 million over the next decade.

Sen. Lamar Alexander, R-Tenn., the top Republican on education issues, told Politicothe proposal would apply to students who have already taken federal loans at higher rates.

"It would save students in 11 million families billions of dollars," he said. "We'd like to be able to do this together and we hope that we can come to a decision right away because families need to make their plans."

The Republican-dominated House has already passed student loan legislation that links interest rates to the 10-year Treasury note. The differences between the Senate and House versions are expected to be resolved before students return to campus this fall.

Lawmakers from both parties met with President Obama and Vice President Joe Biden on Tuesday at the White House. An outline of an agreement seemed to be taking shape Tuesday, with follow-up meetings Wednesday in Democratic Sen. Dick Durbin's office yielding a final agreement.

Democratic Sen. Joe Manchin of West Virginia and Republican Sen. Richard Burr of North Carolina were the main negotiators, with Republican Sen. Lamar Alexander of Tennessee and Durbin filling the role of mediators.

Contributing: Associated Press

USA TODAY

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