Deal to Stop Student Loan Interest from Doubling Appears to be Falling Apart

Efforts to keep interest rates on new student loans from doubling appeared to be falling apart Wednesday as the Democratic leader of the Senate declared a bipartisan proposal unacceptable.

With just days to spare before a July 1 deadline, a group of senators from both parties attempted to link interest rates on new federally subsidized Stafford loans to the financial markets in a deal that would avert a costly rate hike for now but could spell higher rates in coming years. The loans account for a quarter of all federal student lending.

The proposal seemed to stall even before it had a chance to be considered.

The chamber’s top Democrat, Sen. Harry Reid of Nevada, said it could never pass. The Democratic chairman of the education panel said he couldn’t back a plan that doesn’t include stronger protections for students and parents…

There is no limit to how high interest rates could go.

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