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Senators: Student loan interest rates to double

Senator Tom Harkin urged an extension of current rates.

Susan Walsh /Associated Press

Senator Tom Harkin urged an extension of current rates.

WASHINGTON — Student loan rates will double Monday — at least for a while — after a compromise to keep interest rates low proved unwinnable before the July 1 deadline, senators said Thursday.

Senator Tom Harkin, the chairman of the Senate education panel, said none of the proposals circulating among lawmakers could win passage, and he urged lawmakers to extend the current rates for another year when they return from the July 4 recess.

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Harkin said his colleagues could retroactively restore the current rates after the holiday.

Interest rates on new subsidized Stafford loans are set to go from 3.4 percent to 6.8 percent on Monday unless lawmakers take action.

Congress’ Joint Economic Committee estimates the increase will cost the average student $2,600.

‘‘Neither party wants to see rates rise next week,’’ said Senator Richard Burr, Republican of North Carolina. But a one-year rate extension isn’t an acceptable option, either, he said.

‘‘Last year, we kicked the can down the road and passed a one-year extension for only a small group of students. . . . Why would we make the same mistake again and just kick the can down the road another year?’’ said Burr, who was among a group of senators who worked on a competing proposal with Senator Joe Manchin, Democrat of West Virginia..

The Manchin-led proposal would link interest rates to the financial markets.

Critics called it a bait-and-switch that would provide students lower interest rates at first before they climb as the economy improves.

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