WASHINGTON - The Senate's top Democrat and Republican said Tuesday that they've reached a deal that would prevent interest rates on college loans from doubling beginning this weekend for millions of students. But House Speaker John Boehner, R-Ohio, has yet to decide whether the pact will be acceptable to his Republican-run chamber.
The agreement, if approved by Congress, would spell an end to one of this election season's higher-profile conflicts between President Barack Obama and congressional Republicans. Even so, the battle has been a bitter one, with Republicans accusing the White House of dragging out the fight to score political points and Democrats accusing the GOP of blocking action on the issue.
"The president's been largely uninvolved in that, but Sen. Reid and I have an understanding that we think will be acceptable to the House," Senate Minority Leader Mitch McConnell, R-Ky., told reporters.
"We basically have the student loan issue worked out," Senate Majority Leader Harry Reid, D-Nev., said separately.
Under the agreement, interest rates for new subsidized Stafford loans would remain at 3.4 percent through next June 30.
Without congressional action, interest rates on the loans would double to 6.8 percent for new loans beginning July 1, this Sunday, for 7.4 million students the government estimates would get such loans in the next year.
That increase, should it occur, would not affect loans currently held by students. The higher rate would cost the average student an extra $1,000 over the life of the loan, which typically takes more than a decade to repay.
White House press secretary Jay Carney issued a statement expressing support for the agreement, adding, "We hope that Congress will complete the legislative process and send a bill to the president as soon as possible."
About $5 billion of the measure's $6 billion cost would come from Democratic pension-related proposals, including a change in how companies compute the money they must set aside to fund their pensions. The change would make their contributions more consistent year to year and in effect lower them - which business desires - and result in fewer corporate tax deductions for those payments.
The remaining funds would come from a GOP plan to limit federal subsidies for Stafford loans for undergraduates to six years.