WASHINGTON (AP) — An emerging deal to lower interest rates on student loans took shape Thursday, offering Democrats promises that interest rates would not reach 10 percent and giving Republicans a link between borrowing terms and the financial markets.
Lawmakers and their aides were in talks about how they might reduce rates on subsidized Stafford loans, which doubled to 6.8 percent last week in the wake of congressional inaction. Efforts to restore those rates to 3.4 percent were abandoned in favor of a new compromise that bears many similarities with a bill that House Republicans have passed, and with President Barack Obama's budget proposal.
"There is no question that there is a compromise available on this important issue and that the sides have not been that far apart and we just need to get it done," White House spokesman Jay Carney said.
"We have been working with lawmakers to make that compromise happen. We need to make sure that students don't see their rates double," he said.
Under the plan lawmakers are considering, interest rates on new loans would be based on the 10-year Treasury note plus an additional percentage to pay for administrative costs.