WASHINGTON, DC. (CNN) - A bipartisan group of senators has reached an agreement in principle on a deal to lower interest rates on student loans after they doubled on July 1.
Eight senators -- including Democratic Sens. Dick Durbin and Tom Harkin, who have been reluctant to accept compromise proposals -- are hammering out a deal that would permanently tie student loan rates to interest rates on Treasury notes. That would lower rates in the short term, but could mean that rates rise above 6.8 percent in the future.
The compromise would put a cap on how high the rates could go -- 8.25 percent for undergraduate loans and 9.25 percent for graduate students.
On Thursday, senators were waiting for the Congressional Budget Office to weigh in on how much this deal would cost. If that analysis shows that the plan would cost the government money, that could set back the negotiations.
If a final deal is reached, there will likely be a vote before the Senate departs for its August recess, and possibly as early as next week.
The eight lawmakers started working on the compromise almost immediately after a Wednesday vote on a short term fix failed to win 60 votes in the Senate. The vote came after a marathon meeting among Democratic leaders and White House chief of staff Denis McDonough.
That bill failed because Democrats haven't been able to agree on how to proceed on a long-term fix. Several Democrats -- including Sens. Joe Manchin, Tom Carper and Angus King (an independent who caucuses with Democrats) -- had been pushing for a vote on their compromise bill.
But left-leaning Democrats -- like Sen. Elizabeth Warren, D-Mass. -- didn't want to go along with it.
The split has left students who are in the process of getting loans for this fall in limbo, not knowing what their rates might be. Right now, rates for subsidized Stafford loans -- the loans that help the neediest students -- sit at 6.8 percent. That's twice the 3.4 percent that was in effect until July 1.
The House has already passed a bill that would tie rates to the Treasury bill rates over the long term. It's similar to what President Barack Obama had proposed -- but the president has threatened to veto the House version, in part because it uses savings from it to pay down the deficit instead of reinvesting in students.