Harry Reid kills bipartisan deal on interest rates

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 sends subsidized Stafford loan rates up from 3.4 percent to 6.8 percent, a group of senators from both parties announced a plan that would link interest rates on new federally backed loans to the financial markets. The deal would avert a costly rate hike for now but could spell higher rates in coming years.

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