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Rep. Ron Barber, D-Tucson, said a House plan tying student loan rates to Treasury notes does not provide the certainty students need when they are planning how to finance their educations, or if they can even afford school. (Cronkite News Service photo by Matthew Standerfer)

WASHINGTON - For a couple of hours this week, it looked like the Senate would give Alex Miller a chance to relax.

Miller, an Arizona State University senior, faces the possibility that she will have to pay an extra $1,000 this year for her college loan, after a July 1 deadline to keep loan rates from doubling passed without congressional action.

It looked like the Senate had come up with a bipartisan plan Wednesday, according to published reports. But any hopes of a deal were dashed a day later, the reports said, when budget analysts said the plan would add $22 billion to the deficit.

There is still hope that Congress can reach a deal and make it retroactive to July 1, when rates on federally subsidized Stafford loans went from 3.4 percent to 6.8 percent.

Until then, Miller - and as many as 450,000 other students in Arizona - watch and wait.

"It's a little scary" that lawmakers cannot reach a deal on something that Miller says is "so very very important."

The Arizona Public Interest Research Group estimates that the higher rate would cost the typical student an extra $902 a year. It said the average student in the state has about $19,950 in accumulated debt.

"That's going to have a really negative impact on students' ability to stay in school and graduate in a timely manner," said Rep. Kyrsten Sinema, D-Phoenix, of the doubled rate.

Sinema, who has taught at Arizona State for 11 years, said most of her students have at least one loan.

"Almost all of them have a student loan that they've taken out at some point in their career, if not through their entire career," Sinema said.

But financial aid adviser Mark Kantrowitz said that while a higher rate will certainly hit students, it likely will not keep them from going to college or "cause students to drop out."

"It is not the end of the world, yet it's certainly an increase in their costs," said Kantrowitz, the publisher of Edvisors.com. He noted that many students have more than just a Stafford loan, which will help spread the pain.

But Serena Unrein of Arizona PIRG said "student loans should make college more affordable for a student." A higher loan rate "discourages Arizonans from getting a college education," she said.

While it may not be "the end of the world" now, higher rates will have a real impact over time, said Rory O'Sullivan, policy and research director at Young Invincibles.

"We're talking about an extra $1,000 per year per loan - that's going to add up quickly" for Americans who already have more than $1 trillion in total student loan debt, he said.

Congress has faced this issue before: When the Stafford loan rate was set to double last summer, lawmakers simply extended the rate to this July 1.

While some lawmakers wanted another extension this year, the White House and House leaders had other plans.

The House in May passed a measure that would have kept subsidized loan rates from doubling - for now - by tying them to the 10-year Treasury note rate, plus 2.5 percentage points.

That plan was opposed by most House Democrats in a 221-198 vote and was a non-starter in the Senate.

"We would be talking about an interest rate that would go up or down depending on the Treasury notes," said Rep. Ron Barber, D-Tucson. "That uncertainty I think makes it difficult for people to plan or even to know if they can afford to take out a loan."

Sinema said the House plan would be "worse than doing nothing" for students.

President Barack Obama had proposed tying loan rates to Treasury notes, but his plan would have fixed rates for the life of the loan. The White House estimates that roughly 7 million people could be affected nationally by the rate change.

The Senate tried Wednesday to simply extend the 3.4 percent rate. When that failed, negotiations began on the bipartisan plan - yet another version of the Treasury-note scheme, news reports said - but that fizzled Thursday.

Sinema could not predict this week whether Congress will reach a deal before its August recess.

"We may continue negotiations between Republicans and Democrats to find some compromise or middle ground," she said. "But given what we've seen from Congress thus far, I wouldn't hold my breath for that."

She said she will continue to push for an extension of the old rate for four years. That would give students and families "the ability to plan for their four-year undergraduate degree."

"They should know what the rate's going to be when they get done with school," Sinema said.

Miller echoed those concerns about a floating loan rate tied to the markets.

"It makes me nervous," said Miller, who has about $20,000 in debt. "For peace of mind as a student, that doesn't make me feel comfortable at all."

As the window for a solution gets smaller each day, Miller hopes students will contact lawmakers to make their voices heard.

"There is still very much this mindset in American politics that students don't vote and that we don't care about what's happening in Congress," Miller said. "That's just absolutely not true . . . we just need to make more noise about it."

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