WASHINGTON -- Senators are back to the starting line in their search for a compromise that would reduce interest rates on student loans after being spooked by the $22 billion price tag that accompanied a potential deal.
Lawmakers from both parties had agreed on a tentative proposal that offered Democrats the promise that interest rates would not reach 10 percent and gave Republicans a link between borrowing terms and the financial markets that they sought. But that deal's red ink proved disqualifying and sent them back to square one.
Senators and their top aides, along with White House and Education Department officials, were going to return to negotiations for a deal that would undo the rate increase on subsidized Stafford loans, which doubled from 3.4 percent to 6.8 percent on July 1.
Without congressional action before students return to campus, the increase could mean an extra $2,600 for an average student, according to Congress' Joint Economic Committee.
"We have been working with lawmakers to make that compromise happen. We need to make sure that students don't see their rates double," White House spokesman Jay Carney said Thursday. -- AP