Student-loan deal close to agreement

— Congressional bargainers seem near an agreement that would avert a July 1 doubling of interest rates on federal loans to 7.4 million college students and end an election-year battle between President Barack Obama and Congress, Senate aides from both parties said Friday.

Both sides said they were moving toward a deal on how to pay the measure’s $6 billion price tag, the chief source of partisan conflict.

The goal is to push legislation through Congress next week so the current 3.4 percent interest rate on subsidized Stafford loans can be preserved for another year. A 2007 law gradually reduced interest rates on the loans but required them to balloon back to 6.8 percent this July 1 in a cost-saving maneuver.

On another front, the two sides were also close to an agreement to overhaul federal transportation programs, according to House and Senate aides from both parties. Negotiations were expected to continue through the weekend, with votes expected next week on either a major transportation bill or an extension of current programs, said the aides, who spoke on condition of anonymity to discuss details of the talks.

For weeks, Obama has ridiculed Republicans for not moving quickly to prevent student-loan interest rates from doubling.

Though some Republican lawmakers have opposed letting the government set the rates, Republican presidential challenger Mitt Romney and Republican congressional leaders have backed the one-year extension. The remaining dispute has been over how to pay for it.

Republicans have accused Obama of creating a phony issue and drawing out the battle in an attempt to reap political points. In late May, they proposed several options to pay for the measure, all of which were culled from budget savings Obama himself had proposed in the past, but they said the White House was ignoring them.

“Even though the WhiteHouse refuses to respond to our bipartisan approach, Senate Democrats are finally working with us, and a solution is within reach - despite the president’s failure to act,” said Don Stewart, spokesman for Senate Minority Leader Mitch McConnell, R-Ky.

The talks have involved aides to McConnell and Senate Majority Leader Harry Reid, DNev. Democrats said the White House has been kept abreast of the talks, while Republicans said House Speaker John Boehner, R-Ohio, has been kept informed but hasn’t participated in the negotiations.

According to Democratic aides, negotiators were approaching a deal to cover the bill’s costs by charging companies more to insure pensions and changing rules so companies take fewer tax deductions for their pension contributions.

Information for this article was contributed by Joan Lowy of The Associated Press.

Front Section, Pages 3 on 06/23/2012

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