WASHINGTON, D.C. —
Democrats had urged a one- or two-year extension of the current rates, while lawmakers plan to do a complete rewrite of the Higher Education Act in the fall to address the larger issue of college costs. Reid said he would allow members of his caucus one more attempt at the tactic but urged his colleagues to back the long-term proposal.
Republicans have pushed for a link between interest rates and the financial markets. Obama included that link in his budget proposal, as did House Republicans. Democrats balked, saying it could produce government profits on the backs of borrowers if rates continued to climb.
Leaders from both parties, however, recognized the potential to be blamed for the added costs in the 2014 elections if nothing were done.
Senate aides said a vote on the agreement could come as early as Thursday, although it could be pushed back to the middle of next week.
The House has already passed student loan legislation that also 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, and Obama is expected to sign the bill.
Few students had borrowed for fall classes. Students typically do not take out loans until just before they return to campus, and lawmakers have until the August recess to restore the lower rates. The students who had borrowed for summer programs since July 1 would have their rates retroactively reduced.
The deal was estimated to reduce the deficit by $715 million over the next decade.
Lawmakers and their top aides have been tinkering with various proposals — nudging here, trimming there — trying to find a deal that avoids added red ink for students and the government alike.
Democrats and Republicans met with 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.