Senators are closing in on a student loan deal that could rile up some Democrats even if it gains backing by the White House.
Key Senate negotiators met with President Barack Obama in the Oval Office on Tuesday afternoon for an hour to discuss a solution to the doubling of subsidized student loan rates, zeroing in on a new proposal that would peg rates on new loans to 10-year Treasury notes plus 2.05 percent for undergraduates with a cap of 8.25 percent. Graduates would pay the 10-year Treasury rate plus 3.6 percent with a cap of 9.5 percent and 4.6 percent for PLUS loans with a cap of 10.5 percent.
Continue Reading The president met with Sens. Lamar Alexander (R-Tenn.), Richard Burr (R-N.C.), Tom Coburn (R-Okla.), Tom Harkin (D-Iowa), Joe Manchin (D-W.Va.), Angus King (I-Maine) and Majority Whip Dick Durbin (D-Ill.), who has been acting as a facilitator in the bipartisan talks.
Subsidized rates doubled to 6.8 percent on July 1 and the Senate has been unable to pass a bill to deal with the issue. But now with Senate rules changes staved off, the White House is getting set to work closely with Congress on the issue before the August recess and the start of the fall semester, when students begin signing their loans.
Harkin is already balking at the latest proposal, which would reduce the deficit by $715 million. He fears negotiations are slipping away and said Republicans are insisting on using a new student loan bill as the basis for deficit reduction.
"We were close but now we are getting further apart," Harkin told POLITICO. "Republicans still want to raise money off of students, and we don't want to do that."
Others believe an agreement on the loans is closer than ever — Burr called it a good meeting and expects a solution shortly, as does Durbin.
"We've done most of it, and we're now down to specific options," Durbin said in an interview. Negotiators have been sending proposals to the Congressional Budget Office, hoping to come back with a bill that is close to deficit neutral.
Senators involved in the loan issue will meet at 5:30 p.m. Wednesday afternoon to continue working out a compromise.
