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House to vote on variable-rate student loans

Philip Elliott, Associated Press

WASHINGTON (AP) -- House lawmakers are ready to pass legislation that links student loan rates to the financial markets.

It's already drawn a veto threat from President Barack Obama.

The measure set to pass Thursday would avoid a rate increase on new subsidized Stafford loans. Democrats stand largely opposed to the measure, which would provide some students a deal in the first years of the new system before ratcheting up interest rates later.

Interest rates on subsidized Stafford loans are set to double from 3.4 percent to 6.8 percent for new loans on July 1. Both parties want to dodge that, but there is disagreement over how to avoid it.

The Republican chairman of the House education committee, congressman John Kline, says the GOP bill is a starting point for negotiations.