Education Secretary Arne Duncan. (Associated Press) Education Secretary Arne Duncan. (Associated Press)

Education Secretary Arne Duncan on Tuesday praised and defended a proposal for setting student loan rates that was created by a bipartisan group of senators last week and is expected to go to a vote this week. He urged lawmakers to "to get this done as soon as possible."

Although some Democrats have criticized the plan for not doing enough for students, Duncan focused on the positives: Millions of college students and other borrowers could lock-in education loans for the coming school year at rates that are much lower than the current rates. Those new rates would eventually save many students an estimated $1,500 over the life of the loan.

The compromise calls for setting interest rates using the value of the 10-year Treasury bill, plus a percentage add-on. Undergraduates would have the lowest rates, which could go up to 8.25 percent, higher than the current fixed rate of 6.8 percent. Graduate students would pay a higher rate that could go up to 9.5 percent, more than the current rates of 6.8 and 7.9 percent. And PLUS loans, which are taken out by graduate students and parents of students, would have the highest interest rate, which could go as high as 10.5 percent, higher than the current rate of 7.9 percent.

The proposed interest rates are projected to increase in coming years, likely surpassing current rates, but Duncan said that Congress could always act again.

Duncan praised Senate negotiators for imposing caps on how high these rates could go in the future and for not increasing rates as a way to pay down the national deficit. He said he also was glad that the Senate plan would lock-in interest rates for the life of the loan, unlike legislation passed in the House that would allow that rate to change each year. And Duncan gave President Obama a shout-out for showing "tremendous leadership" in pushing for a decision.

"This bipartisan compromise is a win for students," Duncan said during a conference call with reporters.

But Duncan also acknowledged that the interest rate change, while high-profile and much discussed, does little to address the more than $1 trillion in outstanding student loan debt. It also doesn't address the ever-increasing cost of a college education. Those are bigger issues that will be addressed later, he said.

"This is an important first step," Duncan said of the proposed interest rate changes, "but it is just a step."