Deal reached in Senate to keep student loan interest rate low

Republican and Democratic leaders in the Senate say they have reached a deal to continue subsidizing student loans with an interest rate of 3.4 percent instead of allowing it to return to the normal rate of 6.8 percent.

The extension would cost about $6 billion over the next year, but it would save costs for students who take government-subsidized loans.

The Washington Post has the details:

The extension would be paid for by raising premiums for federal pension insurance, an idea acceptable to businesses because rules will also be changed on how companies calculate their pension liabilities. The pension proposal came from [Senate Majority Leader Harry] Reid.

Meanwhile, part-time students would be limited in the number of years they can receive subsidized loans, a suggestion from Republicans.

Senators said they must now decide whether to link the student loan deal to a two-year measure to extend highway funding, which also expires July 1. Talks continue over the bill.

In a statement Tuesday afternoon, White House Press Secretary Jay Carney urged members of Congress to send the bill to the White House quickly:

We're pleased that the Senate has reached a deal to keep rates low and continue offering hard-working students a fair shot at an affordable education. Higher education has never been more important to getting a good job. That's why President Obama has made stopping this rate hike and saving 7.4 million students an average of $1,000 a priority since his State of the Union and has repeatedly called on Congress to act. We hope that Congress will complete the legislative process and send a bill to the President as soon as possible.