Senate Leaders Urge Compromise as Impasse Continues on Student-Loan Interest Rate

The U.S. Senate reaffirmed on Thursday that Congress is still at a stalemate over how to pay for a temporary freeze on the interest rate for federally subsidized student loans.

Unless Congress acts, the interest rate on new subsidized Stafford loans to undergraduate students will double, from 3.4 percent to 6.8 percent, on July 1. As Democrats and Republicans court student voters in an election year, both parties have said they want to find a way to extend the lower interest rate for a year. But they disagree over how to offset the approximately $6-billion cost.

In the Senate on Thursday, a Democratic proposal to pay for the extension by raising taxes on some corporations failed to garner a filibuster-proof majority of 60 votes. The Senate also rejected a Republican amendment, identical to a bill passed by the House of Representatives, that would tap into a fund in the 2010 health-care law set aside for preventative health care.

With both chambers now having held up-or-down votes on the competing proposals, Senate leaders said Thursday that it was time to hammer out a compromise.

The minority leader, Sen. Mitch McConnell, Republican of Kentucky, called for the chair and the senior Republican member of the Senate Education Committee to work on a bipartisan solution.

The majority leader, Sen. Harry Reid, Democrat of Nevada, said on the Senate floor earlier in the day that he had a “renewed” sense of hope that Congress would “reach an agreement to prevent student-loan interest rates from doubling for seven million young men and women.”