"The legislation as presented to me isn't everything I want, but it's the work of a number of Democratic and Republican senators working long, long hours," said Reid, D-Nev.Senate progressives, led by Sen. Tom Harkin, wanted fixed rates for the loans that would lock in a dependable low rate. This makes the rates potentially greater than they would have been had Congress not acted at all, and the rates remain at the current 6.8, though for this year they are lower: 3.85 percent for undergraduates; 5.4 percent for graduate students; and 6.4 percent for parents. These rates are higher than the preferred solution by the majority of Democrats: freezing the rates for one more year at last year's 3.4 percent.
The deal was announced late Wednesday, and although it has lukewarm support among liberal Democrats, it is likely to pass Congress and be signed by President Obama because without action students will face higher interest rates on loans this school year. [...]
Under the agreement, federal student loans will be calculated and fixed to the 10-year Treasury bill. Undergraduates will pay an additional 2.05% with an 8.25% interest rate cap; graduate students will pay an additional 3.6% with a 9.5% interest rate cap; and PLUS loans, which mainly affect parents of college students, will pay an additional 4.6% with a 10.5% interest rate cap.
Senate Majority Leader Harry Reid says that a deal on student loan interest rates has been reached, and could be voted on this week in the Senate.