A bipartisan group of senators reached a tentative agreement to permanently fix federal student loan rates Wednesday evening, following a day of frustration from Republicans and moderate Democrats with what they viewed as liberal slow-walking of a potential deal.
Just a day after being urged by President Barack Obama at the White House to forge a compromise, Senators met twice in the Capitol on Wednesday to discuss legislation to fix student loan rates after Congress let a one-year extension of the subsidized Stafford loan rate expire and double on July 1.
The first meeting was Democrats-only in the afternoon with more than a half dozen senators attending, but it did not include Health, Education, Labor and Pensions Chairman Tom Harkin, D-Iowa, according to a source familiar with negotiations. A second, bipartisan meeting later in the evening in the leadership suite of Sen. Richard J. Durbin, D-Ill., ended with negotiators cautiously optimistic they could move forward on a plan, especially with what they believed was Obama's blessing.
Of all the senators involved in talks on the issue, it has been Harkin who has been most reluctant to sign off on an agreement. As CQ Roll Call has previously reported, even though the White House has said it does not want to raise money from students to pay down the deficit, current law and the framework the administration put forward in its 2014 budget does just that.
Harkin, along with Massachusetts Democrat Elizabeth Warren, has been insistent that an agreement should not raise money off the backs of students. Warren has not been in the room for the recent bipartisan talks.
Frustration with Harkin ran so high Wednesday that GOP negotiators mulled not attending the bipartisan meeting in Durbin's office.
On the way to a late afternoon vote, in a Capitol elevator, Sen. Tom Coburn, R-Okla., urged his fellow GOP negotiators Richard M. Burr of North Carolina and Lamar Alexander of Tennessee to cancel the meeting. Just an hour and a half before it was set to be held, Coburn expressed frustration that the clear edict from the White House to just dispense with the issue was being ignored by Senate progressives who were not on board with the bipartisan push.
The meeting stayed on the schedule, but only Alexander attended for the Republican trio. Sens. Joe Manchin III, D-W.Va., and Angus King, I-Maine, who have been negotiating for weeks with the GOP, also were in attendance.
"We've had a good discussion with Sen. Harkin and Sen. Durbin and we'd like to be able to do this together," Alexander said after the meeting. "We hope that we can, and we hope we can come to a decision right away because families need to make their plans. If we can decide what we're doing and act on it in the next week or so, all the new loans would be retroactive to July 1 and it's a very good plan."
The plan being discussed currently is just the most recent iteration of a general framework that would use 10-year Treasury notes as a basis and then add a certain number of points depending on the type of loan. The plan as being negotiated now has the same formula for both subsidized and unsubsidized Stafford loans.
The formulas for interest rates, as announced are as follows: 10-year Treasury note plus 2.05 percent for both the subsidized and unsubsidized portions of the undergraduate loans, plus 3.6 percent for graduate loans and plus 4.6 percent for PLUS loans. Those rates would be capped at 8.5 percent, 9.5 percent and 10.5 percent, respectively. Though liberal Democrats had been demanding caps, they likely will be unhappy that the agreed to numbers are higher than the rates students would face if Congress did nothing at all. In better economic times, when Treasury rates increase, students' rates could be greater than the 6.8 percent they would get now.
The Congressional Budget Office scored the proposal last week as providing a savings of $715 million over 10 years.
This post has been updated to reflect a deal being announced by sources close to the talks.