Obama backs student loan bill

It looks like the fight over student loan rates is about to end.

The Senate passed a bipartisan compromise Wednesday linking student loan rates to financial market interest rates. The U.S. House is poised to follow suit, and President Obama signaled he would sign the bill.

"This compromise is a major victory for nation's students," Obama said in a statement, and the plan will save undergraduates "an average of more than $1,500 on loans they take out this year."

The student loan program expired July 1 amid a dispute between Obama and congressional Republicans over the details.

From the Associated Press:

"Critics, including some in the president's Democratic caucus, said borrowing for tuition, housing and books would be less expensive this fall, but the costs could soon start climbing under the Senate bill. The compromise would be a good deal for all students through the 2015 academic year. After that, interest rates are expected to climb above where they were when students left campus in the spring, if congressional estimates prove correct. ...

"Undergraduates this fall would borrow at a 3.9 percent interest rate. Graduate students would have access to loans at 5.4 percent, and parents would borrow at 6.4 percent. The rates would be locked in for that year's loan, but each year's loan could be more expensive than the last. Rates would rise as the economy picks up and it becomes more expensive for the government to borrow money."

Obama's statement in full:

"A better bargain for the middle class means making a college education available to every single American willing to work for it.

"That's why I applaud the wide bipartisan majority of Senators who passed a bill to cut rates on nearly all new federal student loans, rolling back a July 1st rate hike and saving undergraduates an average of more than $1,500 on loans they take out this year.

"This compromise is a major victory for our nation's students. It meets the key principles I laid out from the start: it locks in low rates next year, and it doesn't overcharge students to pay down the deficit.

"I urge the House to pass this bill so that I can sign it into law right away, and I hope both parties build on this progress by taking even more steps to bring down soaring costs and keep a good education -- a cornerstone of what it means to be middle class -- within reach for working families."