Source: Senators reach deal on student loans

WASHINGTON -- Heading off a costly loan rate increase for returning college students, a bipartisan group of senators reached a deal yesterday that would offer them better rates this fall but perhaps assign higher rates in coming years.

The deal would offer students lower interest rates through the 2015 academic year, but then rates were expected to climb above where they were when students left campus this spring. The interest rates would be linked to the financial markets, but Democrats won a measure of protection, that rates would never climb higher than 8.25 percent for undergraduate students.

Graduate students' rates would not exceed 9.5 percent, and parents' rates would top out at 10.5 percent.

The deal was described by Republican and Democratic aides who insisted on anonymity because they were not authorized to discuss the specific negotiations.

A vote on the agreement could come as early as today. But it could be put off to the middle of next week, depending on the Senate calendar. -- AP