Last night, U.S. Senate leaders Harry Reid (D-Nev.) and Mitch McConnell (R-Ky.) announced agreement on a plan to keep subsidized Stafford loan rates at 3.4 percent.
(See Politics K-12 blog for more.)
The Republican-controlled House still needs to agree to the terms, but McConnell indicated there is an understanding that the Senate approach will be acceptable to House leaders.
The Chambers need to close the deal by July 1 to avoid the scheduled rate increase to 6.8 percent.
The hang up has been over how to pay for the anticipated $6 billion cost. The Washington Post reported that details of the agreement include paying for the extension by raising premiums for federal pension insurance. Businesses are reportedly open to the idea because rules on how companies calculate their pension liabilities would be changed. More money would be raised, according to the Post, by limiting how long students could get subsidized Stafford loans to six years for a four-year undergraduate program.
The Senate has not decided whether to link the student-loan vote with a highway funding measure, also scheduled to expire July 1.
The White House Press Secretary Jay Carney issued a statement on the Senate's progress toward a deal. "We're pleased that the Senate has reached a deal to keep rates low and continue offering hard-working students a fair shot at an affordable education. Higher education has never been more important to getting a good job," the release said. "That's why President Obama has made stopping this rate hike and saving 7.4 million students an average of $1,000 a priority since his State of the Union and has repeatedly called on Congress to act. We hope that Congress will complete the legislative process and send a bill to the President as soon as possible."
Nancy Zirkin, executive vice president of The Leadership Conference on Civil and Human Rights, issued a statement applauding Senate leaders for reaching a bipartisan agreement to keep student loan interest rates from doubling. "This deal is an imperative for our economy, for the future of our workforce, and for the communities that we represent. But it must get it done before July 1st," she said.
Student advocate groups note that seven million students would benefit from this deal, saving on average $1,000.
"Students need certainty regarding their costs when planning their course work and employment options. This is particularly true for students eligible for subsidized Stafford loans because they have the greatest need," said Zirkin, who's organization is a coalition with 200 national organization members that promote civil rights.