Heading off a costly increase for returning college students, a bipartisan group of senators reached a deal Wednesday that would offer students better rates on their loans this fall but perhaps assign higher rates in coming years. 
 
 The deal would offer students lower interest rates through the 2015 academic year, but then rates were expected to climb above where they were when students left campus this spring. The interest rates would be linked to the financial markets, but Democrats won a protection for students that rates would never climb higher than 8.25 percent for undergraduate students. Graduate students would not pay rates higher than 9.5 percent and parents' rates would top out at 10.5 percent. 
 
 Under the deal, all undergraduates this fall would borrow at 3.85 percent interest rates. Graduate students would have access to loans at 5.4 percent and parents would be able to borrow at 6.4 percent. Those rates would climb as the economy improves and it becomes more expensive for the government to borrow money. 
 
 The deal was described by Republican and Democratic aides who insisted on anonymity because they were not authorized to discuss the ongoing negotiations. 
 
 Undergraduates last year borrowed at 3.4 percent or 6.8 percent, depending on their financial need. Graduate students had access to federal loans at 6.8 percent and parents borrowed at 7.9 percent. 
 
 A vote on the agreement could come as early as Thursday, although it could be pushed back to the middle of next week depending on the Senate calendar. 
 
 The bipartisan agreement is expected to be the final in a string of efforts that have emerged from near constant work to undo a rate hike that took hold for subsidized Stafford loans on July 1. Rates for new subsidized Stafford loans doubled from 3.4 percent to 6.8 percent, adding roughly $2,600 to students' education costs. 
 
 Lawmakers from both parties called the hike senseless but differed on how to restore the lower rates. Republicans have pushed for a link between interest rates and the financial markets. Obama included that link in his budget proposal, as did House Republicans. Democrats balked, saying it could produce government profits on the backs of borrowers if rates continued to climb. 
 
 Leaders from both parties, however, recognized the potential to be blamed for the added costs in the 2014 elections if nothing were done. 
 
 The House has already passed student loan legislation that also links interest rates to the 10-year Treasury note. The differences between the Senate and House versions are expected to be resolved before students return to campus this fall, and Obama is expected to sign the bill. 
 
 Few students had borrowed for fall classes. Students typically do not take out loans until just before they return to campus, and Congress had until they left for the August recess to restore the lower rates. The students who had borrowed for summer programs since July 1 would have their rates retroactively reduced. 
 
 Lawmakers and their top aides have been tinkering with various proposals _ nudging here, trimming there _ trying to find a deal that avoids added red ink for students and the government alike. 
 
 The deal was estimated to reduce the deficit by $715 million over the next decade. 
 
 But if the economy improves as congressional economists predict, rates would climb in coming years. The compromise reached Wednesday evening would limit how high those rates could go, although all were higher than the current fixed levels. 
 
 Lawmakers from both parties met with Obama and Vice President Joe Biden on Tuesday at the White House. An outline of an agreement seemed to be taking shape Tuesday, with follow-up meetings Wednesday in Democratic Sen. Dick Durbin's office yielding a final agreement. 
 
 Democratic Sen. Joe Manchin of West Virginia and Republican Sen. Richard Burr of North Carolina were the main negotiators, with Republican Sen. Lamar Alexander of Tennessee and Durbin filling the role of mediators. 
 
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 Follow Philip Elliott on Twitter: http://www.twitter.com/philip_elliott ||||| Story highlights Bipartisan group of senators announce an agreement 
 
 Plan would cap rates on many types of student loans 
 
 Senate will vote on plan "as quickly as possible," says Reid 
 
 Sen. Tom Harkin, whose support is key, agreed to the deal 
 
 A bipartisan group of senators announced an agreement on a student loans package Thursday that would cap rates, ending a standoff that lasted months and broke through a July 1 deadline for finding a solution. 
 
 Under the compromise measure, undergraduate students would pay a rate of 3.85% next year on subsidized and unsubsidized Stafford loans. The plan would cap rates on loans to undergrads at 8.25%, for graduate students at 9.5% and parents at 10.5%. 
 
 "While this is not the agreement that any of us would have written, and many of us would like to have seen something quite different, I believe we have come a very long way on reaching common ground," Sen. Dick Durbin of Illinois, the Democratic whip in the Senate, said at a press conference Thursday. 
 
 Sen. Tom Harkin, the Democratic chairman of the committee that oversees federal education programs, also was present in announcing the deal. The Iowa senator had resisted for weeks agreeing to a plan unless it included caps on how high the interest rates on the loans could rise. 
 
 Rude awakening for grads 
 
 Speaking after Thursday's news conference, Harkin said lawmakers may revisit the student loans issue when his committee wades into altering the Higher Education Act in the next several months. 
 
 Even as Harkin praised the deal, he said he might reopen it as early as next year. 
 
 "Can we change it? Sure we can change it," Harkin told reporters. "This is not the Ten Commandments written in stone for God's sake." 
 
 "If we don't pass a Higher Education Act at least there is certainty in the future. If we pass a Higher Education Act, we might want to leave it the same we might want to change it a little bit. I don't know," he continued. 
 
 Republicans praised the plan. Sen. Tom Coburn of Oklahoma called it a "win-win for both students and taxpayers." 
 
 "Tying interest rates to the market allows students to take advantage of historically low rates while ensuring taxpayers will not have to foot the bill for arbitrary rates set by Congress," he said. 
 
 Student loan rates doubled July 1 from 3.4% to 6.8% after Congress failed to reach a deal averting the increase. 
 
 The agreement, if approved by the full Senate, would tie interest rates on a variety of government-backed loans to 10-year Treasury notes and would lock in surcharges paid to the government for administrative costs. 
 
 Senate Majority Leader Harry Reid said the upper chamber would vote on the deal "as quickly as possible." 
 
 The White House, which has been heavily involved in negotiations, backs the agreement, a Senate Democratic leadership aide said. 
 
 Opinion: Obama repeats strategy in student loan fight
– A Senate deal is set to lower interest rates on student loans for the next two academic years—but rates could climb after 2015, the AP reports after speaking to aides. Still, in the deal—set for a vote as soon as today—Democrats ensured that undergraduates would never face rates higher than 8.25%, while grad students won't see rates higher than 9.5%, and parents won't have to shell out more than 10.5%. Rates for several types of loans would be tied to 10-year Treasury notes, CNN adds; a House bill offers a similar measure. On July 1, rates for new unsubsidized Stafford loans jumped from 3.4% to 6.8%, the AP notes. This autumn, thanks to the deal, undergraduates would be able to borrow at 3.85% rates; graduates, 5.4%; and parents, 6.4%. A strengthening economy will see the rates climb. The deal is reportedly supported by Sen. Tom Harkin, whose backing likely means wider support among Democrats, CNN notes. The White House also supports the plan, according to a Senate Democratic aide.