Republican and Democratic leaders in the Senate say they have reached a deal to continue subsidizing student loans with an interest rate of 3.4 percent instead of allowing it to return to the normal rate of 6.8 percent.
The extension cost about $6 billion over the next year, but it saves costs for students who take government-subsidized loans.
The extension would be paid for by raising premiums for federal pension insurance, an idea acceptable to businesses because rules will also be changed on how companies calculate their pension liabilities. The pension proposal came from Reid.
Meanwhile, part-time students would be limited in the number of years they can receive subsidized loans, a suggestion from Republicans.
Senators said they must now decide whether to link the student loan deal to a two-year measure to extend highway funding, which also expires July 1. Talks continue over the bill.