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Iowa senator supports tentative deal reached on Senate student loans package

Posted on: 9:57 am, July 18, 2013, by , updated on: 10:19am, July 18, 2013

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WASHINGTON (CNN) — A bipartisan group of senators reached a tentative agreement on a student loans package Wednesday night, multiple aides from each party said.

Sen. Tom Harkin, Democratic chairman of the committee that oversees federal education programs, agreed to the deal, one of those sources close to the negotiations told CNN.

The Iowa senator’s support is key because it would likely persuade most Democratic senators to vote for the bill.

Harkin has resisted for weeks agreeing to a plan unless it included caps on how high the interest rates on the loans could rise. The tentative plan includes caps on loans to undergraduate students at 8.25%, graduate students at 9.5% and parents at 10.5%.

Student loan rates doubled July 1 from 3.4% to 6.8% after Congress failed to reach a deal averting the increase.

Harkin also pressed to ensure the government would not profit from the loans. A final cost analysis, which would determine that, was not completed as of Wednesday night, a Democratic leadership aide said.

The White House, which has been heavily involved in negotiations, backs the agreement, a Senate Democratic leadership aide said.

Still, one word of caution came late Wednesday from an aide to a Democratic senator deeply involved in negotiations. That aide said final details were still being worked out.

This same group of negotiators had previously announced a tentative agreement, but it fell apart after the Congressional Budget Office estimated the costs were high.

The agreement, if approved by the full Senate, would tie interest rates on a variety of government-backed loans to 10-year Treasury notes and would lock in surcharges paid to the government for administrative costs.

It was not known when the Senate would vote on the bill.