Congress already missed its deadline on student loan interest rates, but lawmakers nevertheless knew they could work something out before students started their fall semesters and could apply the changes retroactively. Alas, "working something out" hasn't been easy.
Senate Democrats thought they have a simple solution: leave interest rates at the lower 3.4% rate, which is where they've been for a while, for at least another year while Congress works on a more permanent solution. That bill died last week, despite majority support, at the hands of a Republicans filibuster. A compromise emerged soon after, but it was scuttled by a poor CBO analysis.
This morning, it appears a new solution came together.
Under pressure from the White House, senators are quickly moving forward with a plan to change how the government sets federal student loan interest rates, tying them to market rates but imposing caps on how high those rates can go. [...]The deal was brokered by a bipartisan group of senators who have been negotiating for weeks, with the help of Department of Education staffers who have been camped out in their offices. On Tuesday, the senators ventured to the White House to meet with President Obama, who urged them to make a decision.
So, is the deal any good? The answer isn't entirely straightforward. Both the White House and congressional Republicans were comfortable with tying interest rates to the 10-year Treasury rate -- a point that many Democrats found problematic. But because the Treasury rate may fluctuate significantly, the compromise would offer a ceiling of 8.25% for undergraduates. (The cap is higher for post-grad students and parents that take out loans on students' behalf. Dylan Matthews has a handy table outlining this and the competing proposals.)
Senate Majority Leader Harry Reid (D-Nev.) said the compromise might come to the floor for passage as early as today (thanks to my colleague Tricia McKinney for the heads-up). "The legislation as presented to me isn't everything I want, but it's the work of a number of Democratic and Republican senators working long, long hours," Reid said.