NEW YORK (MainStreet)A group of U.S. Senators has lined up behind yet another student loan bill, and this time, they say it's the real a deal.
What they agreed to is a compromise where undergraduates with Stafford loanssubsidized and unsubsidizedwould pay an interest rate of 3.85% next yearslightly higher than the 3.4% rate that expired on July 1 but less than the 6.8% rate that replaced it.
The gang of nine behind this plan now includes Senators Dick Durbin (D-Ill.), Tom Harkin (D.-Iowa), Jack Reed (D-R.I.) Elizabeth Warren (D-Mass.), Lamar Alexander (R-Tenn.), Joe Manchin (D-W.V.) Richard Burr (R.-N.C.), Tom Coburn (R.-Okla) and Angus King (I-Maine). Not all of them are wild about what they've signed up for. And it is a temporary, one-year fixone that the House has yet to agree to.
What's more, the plan is linked to market ratesthe 10-year Treasury bill--and rates are going up. There is a cap on how high they can go.
"People signing up for their student loans will pay about half what they would have paid" without this bill, said Maine Independent Angus King.
But even with the caps, Stafford loans could go as high as 8.25% in future yearsreflecting a major concession from some senate Democrats, including Warren and Harkin.
Chris Lindstrom, higher education director at U.S. PIRG said she was sure that a deal would get done this week with a vote in the Senate as early as next week. "Things will move very quickly from there in terms of conferencing and a White House signing," she said. "Even if it weren't done until September, then the deal would be retroactive."