After weeks of negotiations, Senators reached a deal Wednesday to retroactively reduce some student loan rates. Interest rates on subsidized Stafford student loans doubled from 3.6 to 6.8 percent July 1. The deal brings that rate back down and ties subsidized and unsubsidized rates to the market, with caps on individual loans.
Senators had been meeting over recent days, including a Tuesday meeting at the White House where President Obama and Vice President Biden had been present.
The deal is based on a proposal that had been crafted by a bipartisan group of senators, including: Sens. Joe Manchin, D-W.Va., Angus King, I-Maine, Lamar Alexander, R-Tenn., Tom Coburn, R-Okla., and Richard Burr, R-N.C.
Sen. Tom Harkin, D-Iowa, as well as other Senate Democratic leaders, had been pushing back against the deal being crafted by the senators, saying it reduced the deficit on the backs of students and would eventually lead to higher rates.
But the pressure grew this week, particularly after the White House meeting where Obama expressed support for the deal, according to a Senate GOP aide.
Harkin expressed support for the deal during a Wednesday meeting in Senate Majority Whip Dick Durbin's office, several aides confirmed, and a Senate aide confirmed he will vote for the plan.
Harkin's support signals the log jam over negotiations having been overcome. The deal ties loan interest rates to the 10-year Treasury note. Both subsidized and unsubsidized Stafford undergraduate loans would add 2.05 percent on top of the T-note with an 8.25 percent up-front cap.
Graduate loans would add 3.6 percent to the Treasury note, with a 9.5 percent cap, and PLUS loans would have an additional 4.6 percent with a 10.5 percent cap. The Congressional Budget Office scores the proposal at about $700 million.
Source: http://news.yahoo.com/senators-reach-deal-student-loan-rates-234635098.html
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