Top leaders in the Senate say they have reached a deal on freezing student loan rates for another year, though they are still deciding the mechanics for how the proposal should make its way through the Congress in the final busy days before lawmakers leave Washington for a week-long July 4 holiday.

(J. Scott Applewhite/AP)

The compromise has appeared a near inevitability for weeks--since Republican presidential candidate Mitt Romney joined President Obama in calling for Congress to keep rates from doubling on July 1.

But Republicans and Democrats have been stuck on how to pay for the $6 billion cost--and over who was more to blame for the continued impasse. Without a resolution, Obama traveled the country to push for congressional action, even as Republicans bashed him for failing to help negotiate a deal.

“We basically have the student loan issue worked out,” Senate Majority Leader Harry M. Reid (D-Nev.) told reporters Tuesday. “The next question is, what do we put it on to make sure we can complete it?”

Senate Minority Leader Mitch McConnell (R-Ky.) reiterated concerns that Obama has been “largely uninvolved,” but said that he and Reid “have an understanding we think will be acceptable to the House.”

A spokesman for House Speaker John A. Boehner (R-Ohio) said he has been aware of the negotiations but has not been a participant. Still, McConnell’s assertion that the deal would find favor with the House would seem to indicate that Republicans are prepared to sign off on both sides of the Capitol.

The details of the detail were confirmed by aides in both parties and Sen. Tom Harkin (D-Iowa).

Federal subsidized student loan rates would remain 3.4 percent for another year, rather than jumping to 6.8 percent, an arrangement that could save money for more 7 million students.

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.

Linking the two would allow swifter passage through the House and Senate. But a deal on the highway bill remains touch-and-go and the loan deal may need to proceed separately.

“We’re very close to having everything done. But until we get everything done, nothing’s done,” Reid said.