Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) announced Tuesday that they had worked out the remaining sticking points over how to pay for the nearly $6 billion cost of keeping student loan interest rates from doubling to 6.8 percent.
McConnell said he and Reid “have an understanding [on student loans] that we think will be acceptable to the House” and that “may or may not” be tied to a long-stalled highway bill that appears to have found new life.
The White House said in a statement that it is pleased with the deal and hopes Congress sends the president a bill soon.
Congressional leaders in both parties are considering combining the student loan rates bill with a massive highway bill before the end of the week, moving closer to completing two of the final items left in the election-year agenda.
It’s a way to kill two birds with one stone: Congress needs to extend the highway bill and keep student loan rates from doubling this week before breaking for a weeklong July Fourth recess.
To pay for the student loan plan, Reid and McConnell agreed to add a provision eliminating the subsidy for part-time students after six years and to change the rules determining how much companies contribute to their employees’ pensions.
The comments came on the heels of newfound optimism that a highway compromise could be passed as soon as this week. Aides in both parties say the odds are slightly better than 50-50. Reid echoed that sentiment on the Senate floor Tuesday morning, and later demanded that highway negotiators reach a deal by Wednesday in order to finish the legislation.
“I think chances today are better than 50-50 that we can get a bill done,” Reid said on the Senate floor. “But we’re still looking at Speaker [John] Boehner to help us get that over the finish line. So we will see what happens on that.”
Since Boehner and Reid sat down last week with the top conference committee negotiators on the transportation bill and told them to “get it done,” Sen. Barbara Boxer (D-Calif.) and Rep. John Mica (R-Fla.) and their staffs have been in intense negotiations to avoid a tenth consecutive highway-funding extension. Boxer and Mica have cited steady progress on finding a middle ground between the Senate’s comprehensive two-year bill and the measures included in a less extensive House bill, but both lawmakers and aides have been tight-lipped on details.
Republicans want to overhaul the way the federal government funds roads, and some GOP aides say they might be willing to compromise on the Keystone XL pipeline if there’s significant movement on transportation policy.
Boxer said the transportation bill is on the “half-yard line” and Sen. Jim Inhofe (R-Okla.), another key negotiator, said he thinks he “can see the light at the end of this tunnel” of the negotiations that have dragged on for nearly two months.
One of the main proposals to pay for both the highway bill and the student loan rate extension is so-called pension smoothing — a $9.4 billion provision designed to stabilize interest rates and pension plan contributions.
Both sides would like to see a highway extension that covers more than six months, but the length is still unclear. A decision will have to be made Tuesday or early Wednesday about how to proceed.
If a deal is struck on the highway bill, it could first be passed by the House and sent to the Senate, which would add student loans and send it back to the House for final approval, aides said.
Reid demurred Tuesday when asked about the possibility of combining the two measures.
“That’s a fair question, but I don’t think we have to worry about that now,” Reid told reporters after a party lunch. “The point is we basically have the student loan issue worked out. The next question is, what do we put it on to make sure we can complete it. There have been a number of suspects we have, but right now, we don’t have that worked out yet.”
Seung Min Kim and Burgess Everett contributed to this report.
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