Student loan deal gains momentum in Senate

Senate backers of a student loan deal are hoping to pass legislation this week after getting a boost on Monday from the Congressional Budget Office (CBO).

The congressional scorekeeper said the bipartisan compromise reached last week would reduce the deficit by $715 million over 10 years.

The relatively meager cut in to spending could make the deal easier for liberal Democrats to swallow. They had blasted an earlier compromise effort as balancing the budget on the backs of students.

{mosads}Senate Majority Leader Harry Reid (D-Nev.) could bring the bipartisan compromise measure to the Senate floor for a vote as soon as Tuesday, and House leaders have indicated they are willing to accept it.

Supporters of the plan are confident they have the votes to pass the bill in the upper chamber but are wary of any losing support in the final hours, according to one Senate aide.

The deal, which was reached on Thursday in the wake of meeting with President Obama, would tie student loan interest rates to the 10-year Treasury bond, allowing the rate to fluctuate with financial markets.

The agreement was struck after Democrats were unable to advance a measure that would have set rates at 3.4 percent for one year.

The Senate bill would retroactively lower subsidized student loan rates from 6.8 percent. The interest rate would be allowed to rise as high as 8.25 percent in the future, however.

The deal tracks closely with the student loan bill that has already passed the House. The White House also pushed a similar approach in Obama’s 2013 budget.

The biggest obstacle to the measure could be liberal opposition.

Left-leaning Democrats have been vocally critical of a market-based approach to student loans, which could expose students to higher rates down the line. They have pushed to freeze interest rates at a lower level for another year, allowing for more time to debate the matter.

Sen. Tom Harkin (D-Iowa), the chairman of the Senate’s education committee, was a big backer of the freeze but has since come around to bless the compromise. But other liberals remain less willing to accept it.

Sen. Jack Reed (D-R.I.) will try to amend the bill on the floor, and Sens. Barbara Boxer (D-Calif.), Richard Blumenthal (D-Conn.), Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) have also come out in opposition.