The deal blew up as soon as the group learned that the proposal would cost $22 billion over ten years.
The administration's signature competitive grant programs took some serious abuse from Democrats during committee consideration of a bill financing the U.S. Department of Education in fiscal year 2014.
The agreement, which is based on proposals put forth by the Obama administration and congressional Republicans, would make interest rates variable from year to year.
Potential selling points for conservatives include language that would give school districts more flexibility when it comes to using federal funds.
Months of inside baseball and congressional sparring has yielded no actual solution on student loans.
The former Race to the Top guru at the U.S. Department of Education said the Obama administration's education legacy will be broader than just that of the grant competition that's become synonymous with the president.
Funding increases for early-childhood education, but nothing for high school redesign, are included in a spending bill for fiscal year 2014 approved by Senate Democrats.
He will become a vice president at GMMB, a public relations and consulting firm in Washington.
The House of Representatives is slated to consider a bill to renew the Elementary and Secondary Education Act really soon.
Emma Vadehra, a former education department staffer who spent the last two years at Uncommon Schools, will take the post.