Congress makes deal on student loans

WASHINGTON -- Facing weekend deadlines for action, congressional leaders have tentatively agreed to deals to avoid a doubling of interest rates for new student loans and to overhaul the nation's transportation programs without a Republican provision forcing approval of the proposed Keystone XL oil pipeline, congressional officials said yesterday.

The agreements underscored the pressures both parties face to avoid angering voters and embarrassing headlines in the run-up to this November's presidential and congressional elections.

Congressional leaders were hoping to combine the highway and student loan measures into a single bill to reduce potential procedural obstacles, and hope to vote final approval this week. Lawmakers would then leave Washington for a July 4 recess.

President Barack Obama spent weeks this spring touring college campuses and lambasting Republicans for not pushing a freeze on student loan rates through Congress. GOP presidential challenger Mitt Romney, looking to avoid handing Obama an issue, quickly said he favored the interest rate extension and congressional GOP leaders did, too.

The student loan pact would keep today's 3.4 percent interest rates on subsidized Stafford loans from doubling for new loans approved beginning on Sunday, an automatic increase that Congress enacted five years ago to save money. If they did double, it would affect 7.4 million students expected to get the loans over the 12 months beginning July 1, adding $1,000 to the interest costs of the typical borrower over each loan's life.

The tentative agreement was on the same package Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) had said Tuesday that they had shaken hands on, said a congressional Republican who spoke on condition of anonymity to describe the measure's status. McConnell said he expected the House to accept the agreement.