By Roberta Rampton and Thomas Ferraro
WASHINGTON (Reuters) - Democratic and Republican negotiators neared a pair of election-year deals on Tuesday - one for a massive transportation bill, the other to prevent a doubling of interest rates on federal student loans, said Senate Majority Leader Harry Reid.
Speaking on the Senate floor, Reid, a Democrat, said it was possible that final bipartisan agreements could be reached on both long-stalled pieces of legislation before lawmakers leave at the end of the week for a holiday recess.
Senate aides said the two bills could be coupled, passed together and presented to President Barack Obama as a package.
Federal funding for road, bridge and rail projects - and as many as 3 million construction jobs - expires on Saturday, putting lawmakers under pressure to either come to an agreement on a two-year package proposed by the Senate, or craft a short-term extension at current funding levels.
The political stakes are high. Neither Democrats nor Republicans want to be blamed for stalling a bill, a move that would hurt the economy ahead of the November 6 general election.
"I think its chances today are better than 50-50 that we can get a bill done," Reid said on the Senate floor, adding that he needs a hand from the top Republican in the House of Representatives.
"But, we're still looking at Speaker (John) Boehner to help us get that over the finish line so we will see what happens on that," Reid said.
Boehner spokesman Michael Steel said, "House negotiators ... are continuing to work towards a bill that includes real reforms in the way we spend taxpayers' highway dollars - and common-sense jobs initiatives like" the Keystone pipeline project.
Republicans want the highway bill to include the Canada-to-Texas Keystone pipeline project, which Obama has put on hold pending further review.
Lawmakers must move fast to prevent on July 1 a doubling of the interest rate on federal Stafford loans to 6.8 percent.
In recent months, each side has swapped and rejected competing proposals to cover the $6 billion cost of extending the current interest rate of 3.4 percent for another year.
Failure to reach an agreement would cost an estimated 7.4 million students an average of about $1,000 each in added costs over the life of their college loans, the White House estimates.
Obama began cranking up pressure on Congress in April with campaign-style speeches at college campuses urging it to extend the low-rate for student loans.
Republican presidential challenger Mitt Romney subsequently said that he, too, believes that they should be renewed, but Democratic and Republican lawmakers have wrestled for months how to fund it without adding to budget deficits.
On Tuesday, Reid sounded more optimistic on the student loan bill than on the transportation measure.
"We are working on that. I hope to get that done soon. The general feeling is we have worked out a compromise on that that is acceptable," Reid said.
On Monday, senators involved in the talks, which are continuing, said they might need to work through a Friday deadline to finish the package, or pass a very short-term extension to give staff a week or two to draft text.
The starting point for talks was a two-year, $109 billion transportation package passed by the Senate. Republicans have won some concessions to streamline environmental reviews for certain types of road projects, and to ease proposed regulations for coal ash, a power-plant byproduct used in cement.
House Republicans have thus far demanded inclusion in transportation bill of a provision to provide accelerated approval of the Keystone XL crude oil pipeline from Canada to the United States.
Obama put the project on hold earlier this year pending further environmental review. He has threatened to veto legislation that would overturn his decision.
Negotiators have discussed ways to hold a separate vote on the pipeline.
After talks flagged last week, Boehner and Reid urged their top negotiators - Representative John Mica and Senator Barbara Boxer - to give talks another try.
(Additional reporting by Richard Cowan; Editing by Fred Barbash, Vicki Allen and Bill Trott)