President Barack Obama backs a compromise the Senate reached on student loans, a senior administration official said Thursday, according to Politico
Under the agreement forged Wednesday by a bipartisan Senate group, the interest rate for undergraduate Stafford loans would be cut to 3.86 percent for the year that began July 1
The rate for subsidized Stafford loans had doubled to 6.8 percent from 3.4 percent on that date. Unsubsidized Stafford loan rates already stood at 6.8 percent.
Starting next year, all undergraduate Stafford loans would carry an interest rate 2.05 percentage points above the yield on the last auction of 10-year Treasury notes before June 1, Senate aides told Bloomberg. The rates would have a ceiling of 8.25 percent, they said. The 10-year Treasury yield registered 2.52 percent Thursday.
The White House played a strong role in the negotiations that led to the accord, the administration official said, according to Politico. Some of the senators who were part of the talks conferred with Obama and Vice President Joe Biden at the White House Tuesday.
The administration was initially at odds with Senate Democrats, who opposed the idea of linking student loan rates to the 10-year Treasury yield, a Democratic leadership aide told Bloomberg. That idea first came from the president.
Senate Majority Leader Harry Reid says he wants to see a quick vote on a compromise bill, Bloomberg reports. "It’s possible we could do it today," he said on the Senate floor Thursday. Reid's goal is to send a bill to President Barack Obama’s desk before Congress recesses in August.
The Congressional Budget Office estimates the Senate's compromise plan would cut government spending by $715 million over the next decade, says Republican Sen. Lamar Alexander of Tennessee.
“Our goal is to not make any money on the backs of students, not to cost the taxpayers anything,” the former U.S. education secretary said, according to Bloomberg.
The bipartisan Senate group includes Alexander, fellow Republicans Tom Coburn of Oklahoma, Richard Burr of North Carolina, and Democrat Joe Manchin of West Virginia.
The House has passed a bill that would put Stafford loan interest rates 2.5 percentage points above the 10-year Treasury auction yield.
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