WASHINGTON — A bipartisan compromise on student loans promises better deals for students and parents over the next few years but could spell higher rates if it gets more expensive for the government to borrow money as expected.
The Senate deal shifts decisions on interest rates from the whims of Congress to the financial markets and was expected to come to a vote next week, well before students returning to campus this fall would face costs to borrow money to pay for tuition, housing and books. The deal heads off a potential doubling of rates on some students loans that would cost students an extra $2,600 if Congress did nothing.
“We have gone through weeks of negotiations and we have an agreement,” said Sen. Dick Durbin, D-Ill.
Sen. Lamar Alexander, R-Tenn., said students benefited: “For every one of them, the interest rates on their loans will be lower.”
At least for now. The compromise could be a good deal for students through the 2015 academic year, but then interest rates are expected to climb above where they were when students left campus in the spring.
Even in announcing the compromise, it was clear the negotiations were dicey.
“While this is not the agreement any of us would have written and many of us would like to have seen something quite different, I believe that we have come a very long way on reaching common ground,” Durbin told reporters.
Moments later, Democratic Sen. Tom Harkin of Iowa, chairman of the Senate Health, Education, Labor and Pension Committee, said he would revisit the whole agreement this fall, when his panel takes up a rewrite of the Higher Education Act.
“Can we change it? Sure, we can change it. It’s not the Ten Commandments, for God’s sake,” Harkin said.
Harkin did little to hide his unhappiness with the compromise but said there were few options to avoid a costly hike on students returning to campus this fall.