The U.S. Senate deadlocked Thursday over federal student loan rates, narrowing their window to prevent rates on certain loans from doubling for about 7 million borrowers on July 1.
With rates for new subsidized loans scheduled to jump to 6.8 percent in roughly three weeks unless Congress acts, competing bills fell short of the 60 votes needed to overcome a filibuster in the Democratic-led upper chamber.
Republicans blocked a Democratic plan, supported by U.S. Sens. Amy Klobuchar and Al Franken, that would lock in the current 3.4 percent rate for subsidized loans two years, allowing Congress more time to debate an overhaul of federal lending.
Klobuchar and Franken were among the Democrats who thwarted a Republican proposal that would tie loan rates to the yield on the government's 10-year Treasury bill, plus 3 percentage points.
The issues hits home for lawmakers in Minnesota, where the average college graduates leaves school with nearly $30,000 in debt.
"... the last thing Congress should do is saddle future graduates with more debt," Franken said in a statement. "I'm disheartened that today we weren't able to prevent the interest rate on subsidized Stafford loans from doubling, but I will keep fighting until we get the job done."
Like their colleagues in the Senate, the Republican-led House already passed legislation that would link students' loan rates to financial markets. The House plan, written by Republican U.S. Rep. John Kline, would reset interest rates every year, but include a cap on interest rates facing students.
President Obama threatened to veto his legislation, arguing that the plan would create uncertainty for students and families beacuse the rates would rise or fall with the market each year.
Thursday's developments frustrated Kline, chairman of the House Education and the Workforce Committee.
"The Senate showed us again today that they can't get anything done," he said. "They can sit back and criticize us, but they need to pass something."
Last year, with the July 1 deadline looming, lawmakers approved a one-year extension of the 3.4 percent rate.
This year, committee leaders, including Kline, hoped to hammer out deals in their respective chambers before coming together to iron out the differences before the cutoff date. But the prospects for compromise seem dimmer this time around, lawmakers said Thursday.