WASHINGTON -- Senate negotiators seeking to end a congressional impasse over government-backed college aid reached a tentative agreement on canceling the July 1 doubling of a loan rate for 7 million low-income students, according to a senator involved in the talks.
"I think we have an agreement in principle," said Lamar Alexander of Tennessee, the top Republican on the Senate Health, Education, Labor and Pensions Committee, who served as secretary of the Education Department under President George H.W. Bush.
Alexander led the talks along with Sen. Dick Durbin of Illinois, the chamber's No. 2 Democrat.
The bipartisan negotiators tentatively agreed to tie rates to annual changes in the 10-year Treasury yield, with interest-rate caps to protect students from higher borrowing costs, said aides from both parties who asked not to be identified to discuss the negotiations.
Lawmakers are awaiting a cost analysis from the Congressional Budget Office before signing off on the accord. That analysis would determine the proposal's effect on the budget deficit.
"We have only one number to get back" from CBO, Alexander said yesterday in an interview.
Negotiations intensified Wednesday after Senate Republicans blocked a Democratic plan to revert to the 3.4 percent rate for new subsidized Stafford loans, which are provided to undergraduates based on financial need. The rate doubled to 6.8 percent on July 1 after lawmakers failed to pass legislation extending the lower rate before leaving for their July 4 break. Rates for unsubsidized Stafford loans, available to undergraduates regardless of income, were already at 6.8 percent.
It was still unclear how many other senators besides the eight involved in the talks would be willing to support the agreement, one aide said. Inclusion of a cap on annual interest-rate increases was a concession to Senate Democrats, who have balked at tying the loans to market fluctuations.
That concept was proposed by President Barack Obama and embodied in House-passed legislation that would peg loan rates to changes in the 10-year Treasury note's yield.
Jay Carney, Obama's press secretary, said at his daily briefing that the White House was encouraged by the issue's progress, and House Speaker John Boehner (R-Ohio) said he hoped the tentative agreement would lead to speedy action. "I hope it's real and I hope they move it soon" to Senate passage, he said.