WASHINGTON (Reuters) - President Barack Obama supports compromise legislation holding down interest rates on student loans and was involved in Senate negotiations, a senior administration official said on Thursday.
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.
A Democratic official said the measure would not raise money from charging students higher rates and would set a cap to protect students from future rate increases.
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 that were available late Wednesday, students would see interest rates dialed back to 3.4 percent for a couple of years, after which 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.
Reporting by Mark Felsenthal; Editing by Vicki Allen