WASHINGTON — College students faced increasing uncertainty about the cost of new student loans after senators failed Thursday to advance partisan proposals to keep interest rates from doubling on July 1.
Dueling measures in the Senate would have kept interest rates on some student loans from moving from 3.4 percent to 6.8 percent, although separate Republican and Democratic proposals each failed to win 60 votes needed on procedural votes. The failure means that unless lawmakers can find a rare bipartisan agreement, students are likely to face higher rates on new subsidized Stafford student loans this fall but enjoy greater certainty on the interest they will be expected to pay during the life of their loans.
"I cannot understand why we're having a problem with this," Senate Majority Leader Harry Reid told reporters after the vote.
The top Republican on the Senate education panel seemed to share that frustration. "If we can't agree on this, we can't agree on anything," said Sen. Lamar Alexander. "This is a manufactured crisis."
The failure comes just three weeks before interest rates increase on federally subsidized Stafford loans return to 2008 levels. For students who max out their student loans every year, the rate shift would mean this year's loans will cost more than $1,000 than last.
"Congress must act immediately to stop the imminent doubling of interest rates on student loans," the White House said in a statement as President Barack Obama was on his way to North Carolina to visit a school.
Democrats in the Senate unsuccessful sought a two-year extension of the current rates while lawmakers write a comprehensive overhaul of the student loan process.
Republicans, meanwhile, wanted to link interest rates to financial markets. Under Senate Republicans' plan, interest rates would be based on the 10-year Treasury note and, once the rates were set each year, remain there until the loans were paid off.