Sen. Joe Manchin, D-W.Va., told reporters Thursday that a bipartisan group had reached a 'delicate deal' on student loans, which would retroactively keep 7 million students from seeing their interest rates double from 3.4 percent to 6.8 percent.
"Everybody came to an agreement," Manchin said. "It should save in the neighborhood of $8 or $9 billion in interest students shouldn't have to pay."
The announcement came just 24 hours after the Senate failed to extend loan interest rates at 3.4 percent for an additional year, something many argued would give the Senate more time to hammer out a long-term plan. The Senate voted 51 to 49 to reject that extension, leaving students uncertain of how much they may have to pay in loans.
The tentative negotiation would tie all student loan interest rates to the 10-year Treasury notes, an idea backed by both President Barack Obama and House Republicans.
Under the plan, interest rates for undergraduates would be linked to U.S. Treasury bonds plus an additional 1.8 points. Rates on graduate loans would be tied to the same bonds plus 3.4 points. Parents who take out student loans for their children through the PLUS program would pay the Treasury rate plus an additional 4.5 percentage points.
The plan deviates from the House legislation in that interest rates would be guaranteed for the life of the loan. It also varies from the president's plan by ensuring that the interest rates never rise above 8.5 percent.
It is unclear how many lawmakers outside of the eight who negotiated the deal will be willing to sign on. Senators are still waiting for the Congressional Budget Office to release an estimate on how much the bill would cost.
In the House, where Republicans have already passed a bill to tie student loan interest rates to the market, both Democratic and House leaders were optimistic that the Senate was taking a positive step forward.
"I hope they move it soon," House Speaker John Boehner, R-Ohio, said during a press conference.