Senators Ready to Restore Lower College Loan Rates - KTVN Channel 2 - Reno Tahoe Sparks News, Weather, Video

Senators Ready to Restore Lower College Loan Rates

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A bipartisan group of senators is announcing a deal that lets students dodge higher interest rates when they go back to campus this fall.
The group on Thursday told reporters they have reached a compromise that lowers the rates for all students who borrow from the federal government. The rates would be linked to financial markets, meaning interest rates would climb in coming years.

Through the 2015 academic year, undergrads will borrow at 3.85%. After that, though rates would increase significantly. Undergraduate rates will go up an additional 2.05% with an 8.25% cap.

Graduate students will pay an additional 3.6% maxing out at 9.5%.

And parents borrowing for their students will pay an additional 4.6% but no more than 10.5% total.

Sources say President Obama has signed off on the compromise.

"We'll wait to see what's produced before we judge it. But obviously the president is very concerned about this issue," says White House Press Secretary Jay Carney.

Democrats insisted on and won a cap on how rates could climb.

Democratic Sen. Dick Durbin of Illinois says the bill does not give any negotiator everything he sought. But it provides relief for students who were facing interest rates that doubled to 6.8 percent on new loans.
The House has already passed similar legislation and the differences could be resolved before students return to campus.  (AP)

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