Senate Leaders Strike Deal to Freeze Student Loan Interest Rates

Dan Friedman
National Journal

Senate leaders have effectively reached an agreement to freeze student-loan interest rates at 3.4 percent for one year, staffers briefed on talks said on Friday evening.

“There is deal that is being finalized right now,” a Senate Democratic aide said. “Right now, what they are doing is crossing t's and dotting i's.”

An official announcement of the agreement is expected on Monday or Tuesday.

Senate aides said that aides to Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., have agreed on how to cover the $6 billion cost of the bill, which has been the main sticking point. Pay-fors include Democratic proposals involving pensions. The deal also includes a GOP proposal to cut off subsidized student loans after six years, saving about $1.2 billion a year.

Leadership staffers this weekend are drafting legislative language and awaiting a Congressional Budget Office score, aides said. House Speaker John Boehner, R-Ohio, has been briefed on the talks, but his office is not involved in negotiations because the House already passed a bill extending the student-loan rate freeze, GOP aides said.

The agreement comes with President Obama scheduled on Monday to again call on Congress to resolve the issue. Republicans argue Obama’s interest in using the issue as political fodder is the main reason an agreement was not reached sooner.

“Even though the White House refuses to respond to our bipartisan approach, Senate Democrats are finally working with us, and a solution is within reach — despite the president's failure to act,” McConnell spokesman Don Stewart said in a statement.