Democratic and Republican members of the Senate announced Thursday that they have reached a compromise on lowering -- at least for now -- interest rates on federal student loans.
The compromise plan resembles the legislation already passed in the Republican-led House, tying interest rates to the market.
"The legislation as has been presented to me isn't everything I want, but it's a work of a number of Democratic and Republican senators working long, long hours," Senate Majority Leader Harry Reid, D-Nev., said on the Senate floor Thursday. He noted that the senators who negotiated the deal met with President Obama two nights ago for about 90 minutes.
"We have to get this done as soon as possible," Reid said, noting that students will soon be returning to school.
Earlier this month, the student loan rate doubled from 3.4 percent to 6.8 percent after Congress failed to extend the lower rate. Both Democrats and Republicans say they are in favor of lower rates, but up to this point, they have disagreed on whether or not to tie the interest rates to the market. The Senate earlier this montha measure that would have restored the 3.4 percent rate for another year, giving lawmakers more time to find a longterm solution.
Undergraduates would borrow at 3.85 percent interest rate with a cap of 8.25 percent. Graduate students would borrow at 5.4 percent rate with a cap of 9.5 percent. Parents would borrow at 6.4 percent with a cap of 10.5 percent.
The lower rates would last through the 2015 academic year and would be retroactive.
A bipartisan group led by Sen. Dick Durbin, D-Ill., formally announced the deal Thursday, saying they hope to pass the legislation before leaving for their August recess. Along with Durbin, the group included Sens. Tom Harkin, D-Iowa, Lamar Alexander, R-Tenn., Tom Carper, D-Del., Joe Manchin, D-WVa., Angus King, I-Maine and Richard Burr, R-N.C.