A plan from Democrats that would have retroactively lowered student loan interest rates failed in the Senate Wednesday along party lines, falling just short of the 60 votes needed to pass.
Interest rates on federally-subsidized student loans doubled from 3.4 to 6.8 percent on July 1, as Congress failed to prevent the jump. The Senate Democrats' bill, which failed on a 51-49 vote, would have retroactively lowered the rates to 3.4 percent for one more year, with the intent of giving lawmakers more time to come up with a long-term solution.
But Republicans refuted the plan, saying it would only prolong the problem at the expense of students.
House Republicans passed a bill for a long-term fix months ago that would tie the interest rate to the economic indicators. The Smarter Solutions for Students Act, as it is called, would set the interest rates equal to a market-based rate plus another 2.5 percent, and would never let the rates surpass 8.5 percent. President Barack Obama proposed a similar plan in his 2014 budget, but it did not include an interest rate cap and would fix the interest rate for the life of the loan, unlike the House bill.
Rep. John Kline, R-Minn., said Senate Democrats have been pushing a "shortsighted plan that is completely out of touch with the priorities of the White House and the American public."
"Right now, millions of students trying to prepare for college and apply for financial aid are facing higher interest rates," Kline, who chairs the House Education and Workforce Committee, said in a released statement. "It's time to stop playing spiteful political games and move forward with a long-term solution."
Some Democrats have favored extending the lower rate because they say the Republican proposal could be worse than simply allowing the rates to stay at 6.8 percent.
Senate Majority Leader Harry Reid, D-Nev., said in a released statement Tuesday that the Republican-backed options would allow interest rates to rise above 6.8 percent in a few years.
"College has never been more expensive and further out of reach for American families," Reid said. "That's why it's critical that we keep interest rates low on federal student loans, so more promising students can realize their dream of higher education."
Republicans, he argued, are promoting a plan that would balance the budget "on the backs of struggling students."