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Homepage (Subscribers) / SENATE

Lawmakers Approaching Student-Loan Deal

photo of Dan  Friedman
June 21, 2012

Senate Democrats said on Thursday that they are close to a deal with congressional Republicans to freeze student-loan interest rates at 3.4 percent before the July 1 deadline.

“We have great hope that we can get that done," Senate Majority Leader Harry Reid, D-Nev., said, citing progress made in a series of meetings over the last 48 hours. “While we're not there, we're well down the road,” he added.

Leadership aides said that those meetings primarily involve Reid staffers and aides to Senate Minority Leader Mitch McConnell, R-Ky. House Speaker John Boehner, R-Ohio, is informed of the progress but his office is not a primary negotiator, GOP aides said. 

 

Senate Health, Education, Labor, and Pensions Committee Chairman Tom Harkin, D-Iowa, who said he discussed the potential agreement with Reid, said a deal that prevents interest rates from doubling could be reached within days.

“We are very close,” Harkin said. He said an unspecified scoring issue is now the main obstacle.

The stepped up negotiations on Capitol Hill came as President Obama ripped Congress for not resolving the issue. “It's mind-boggling that we've had this stalemate in Washington,” Obama said during a speech on Thursday.

Republicans pointed out that the White House is not directly involved in the negotiations.

“We have been waiting ever since for the president’s response,” McConnell said from the Senate floor on Thursday. “He has yet to offer a concrete solution.”

McConnell said that a deal has always been easily attainable and blamed Obama’s desire to milk the dispute as a political issue for the delay.

Although both parties generally support freezing the student-loan interest rate for one year, the challenge for Congress has been coming up with the $6 billion to do so. The House approved a freeze but included an offset Democrats oppose; since then, GOP leaders and Reid have exchanged offers.

Harkin said the potential agreement would cover the cost in ways both parties have proposed. The deal would likely include pension-related proposals outlined by Reid, including one that would increase premiums for pension insurance, Harkin said. Another proposal, which the Senate included in its highway bill, would allow employers to compute their pension liabilities within a 25-year “stabilization range.” That change would generate fewer tax deductions.

Transportation conferees previously balked at that proposal but Democrats said the provision remains on table in the student-loan negotiations.

The potential deal would likely include a GOP proposal to cut off subsidized student loans after six years, saving about $1.2 billion a year, according to Harkin.

“I was asked about that by the leadership and I said I think that’s good. I don’t mind that at all,” Harkin said.

Harkin said other proposed GOP provisions for offsetting the cost could still be included.

House and Senate Republican leadership aides declined to comment on what specific offsets are under discussion.

Fawn Johnson contributed contributed to this article.

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