Chalk up another victory for President Obama and the Democrats.
"It would save students in 11 million families billions of dollars," said Lamar Alexander (R-Tenn.). "We'd like to be able to do this together and we hope that we can come to a decision right away because families need to make their plans."
Alexander, the top Republican on education issues, said their proposal would apply retroactively to students who have already drawn federal loans at higher rates which went into effect on July 1.
A Senate aide familiar with the talks said the bill could go on the floor as soon as tomorrow. Leadership aides said that's implausible but not impossible. Otherwise the bill would get a floor vote early next week.
The House has passed a different loans bill and would need to take up what the Senate passes in order for the bill to become law.
The new Senate proposal 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.
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. The president met with Alexander, Richard Burr (R-N.C.), Tom Coburn (R-Okla.), Tom Harkin (D-Iowa), Joe Manchin (D-W.Va.), Angus King (I-Maine) and Durbin (D-Ill.), who has been acting as a facilitator in the bipartisan talks.
Subsidized rates doubled to 6.8 percent July 1 and the Senate has been unable to pass a bill to deal with the issue. Previously, Democrats wanted to extend the 3.4 percent rate for those loans for a year but could draw no GOP support. But now with Senate rules changes staved off, the White House is working closely with Congress to resolve the loans impasse before the August recess and the start of the fall semester, when students begin signing their loans.
The problem isn't so much the rates, but rather the program itself. Student loan debt has topped $1 trillion and the percentage of loans in default is skyrocketing. Anyone with an ounce of intelligence can see where this is headed; bailout. The current track we are on is unsustainable and the only question to decide is how many zeroes we are going to be adding on to the bailout package.
This agreement doesn't help those near default or in default on their loans. And as long as Congresss refuses to address the underlying weakness of the program, making it easier to get a loan in the first place is like giving free whiskey to an alcoholic.