The Senate reached an agreement on a bill to extend subsidized federal student loans for another year.

The agreement is on an extension of the 3.4 percent rate on Stafford loans, which will double on July 1 if the House of Representatives does not also pass the bill.

Sen. Chuck Grassley, R-Iowa, explained that he had faith the bill would pass but that congressional leaders needed to reach a compromise on how to pay for the loan extension.

That compromise came in a $6.7 billion bill from Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky.

$5.5 billion of the bill will be paid for through two new pension measures. One would make changes to how private pension interest payments are calculated and the other would put higher premiums on companies participating in the Pension Benefit Guaranty Corporation.

The other $1.2 billion of the bill will come from limiting how long a student can receive Stafford loans to six years. There was previously no limit on the loan.

The House is expected to pass the bill has well, most likely by or before Friday.

If the bill is not passed in the House by Sunday, around 7.4 million students that rely on subsidized Stafford loans would see an increase of $1,000 to the interest costs over each loan’s life.

Roberta Johnson, director of financial aid at Iowa State, said the increase would mean about $7 added to your monthly payment if the student is on a 10-year repayment plan.