WASHINGTON (Reuters) - U.S. senators reached a deal on Wednesday to temporarily hold interest rates on student loans at lower levels as they raced to get the measure completed before an August deadline, a Senate aide said.
An aide for another senior senator said an outline of the plan had begun to emerge, but no deal had been reached and no vote on it was set yet.
Interest rates on new federal Stafford loans doubled to 6.8 percent this month when lawmakers failed to meet a July 1 deadline to prevent an automatic increase.
According to details of the Senate plan, students would see interest rates dialed back to 3.4 percent for a couple of years, but then rates could be allowed to rise sharply.
Undergraduates would see loans go as high as 8.25 percent after 2015, graduates would face rates as high as 9.5 percent, and parents would face rates as high as 10.5 percent.
The plan would cut the federal deficit by $715 million over 10 years, said the first aide, who spoke on the condition of anonymity.
Last week, the Senate blocked a bill that offered a temporary fix for students who face a steep increase in loan rates. Senators voted 51 to 49 in favor of the bill, falling short of the 60 votes required for passage.
The bill would have frozen interest rates for undergraduates at 3.4 percent for a year while lawmakers work on a long-term solution.
Senators hope to finish the deal before the August summer recess.