Horace Mann School, the $29,000-a-year preparatory school in the Bronx, and dozens more New York educational and cultural institutions just got stuck between the collapse of auction-rate bonds and an expired New York law.

Rates on $60 million of the securities sold by Horace Mann in 2002 rose to 5.4%last month from 3.4%. At nearby Riverdale Country School, where tuition is $35,250 for grades six through 12, interest jumped to 11% from 3%. Interest costs almost doubled for borrowers in the $330 billion auction-rate bond market this year after banks stopped buying unwanted securities for the first time since they were created in the 1980s. Unlike local governments across the country, the New York institutions can’t convert the bonds into other types of debt after a state funding law expired January 31. “It’s a horrible situation,” the former chairman of the New York City Economic Development Corp. and a board member at Riverdale, Andrew Alper, said. “The only solution is to pay the bonds off or to pay a higher interest rate.”

Horace Mann officials declined to comment. Graduates of the 121-year-old school include venture capital investor Alan Patricof, founder of private equity firm Apax Partners, and Governor Spitzer.

More than 800 YMCAs, libraries, hospitals, universities and prep schools in the state sold so-called civic-facility bonds, including auction-rate debt, through industrial development authorities, according to the Albany-based New York State Economic Development Council.

Auction rates for some of these borrowers have risen as much as fourfold.

“Nobody has defaulted so far, but the longer this lasts the more borrowers will run into problems,” the president of the New York City Economic Development Corp., Seth Pinsky, said. “If a school is paying a 12% bank rate instead of 3%, the money is coming out of school programs.”

Mr. Pinsky is also chairman of the New York City Industrial Development Agency that provided financing for Horace Mann, New York Law School, and the UJA Federation of New York. Municipal borrowers include non-profit corporations that borrow through “conduit'” issuers such as development authorities to obtain tax-exempt rates.

Borrowers for years relied on bankers to prop up auctions with their own bids, without knowing how frequently dealers stepped in to buy the securities.

When there aren’t enough bidders in auctions that typically take place every seven, 28, or 35 days, rates are determined by formulas spelled out when the debt is originally issued. Interest on bonds where bidding is held every seven days rose to an average 6.56% as of March 19, from 3.63% on January, according to index data published by the Securities Industry and Financial Markets Association.

Borrowers from Wisconsin to California plan to pull at least $21 billion of bonds out of the auction-rate market by May 1 to escape soaring costs, data compiled by Bloomberg show.

Civic groups in New York lost their ability to borrow using development agencies as state lawmakers battled over rewriting the law that governs industrial authorities. Assemblyman Sam Hoyt of Buffalo, a chairman of the local governments committee, refused to extend debt-issuing authority.