The U.S. Senate failed to pass a bill Wednesday that would have kept subsided student loans at a low rate.
The proposed bill would have frozen low interest rates on one type of federal student loan for another year, while lawmakers craft a long-term strategy for setting all education loan interest rates. However, only 51 lawmakers voted in favor of the bill, which was not enough to advance it past the Senate.
Now, Congress will try to reach a consensus before the August recess, when most students will have to lock in their loans for the upcoming school year, reports the Washington Post.
Interest rates on Stafford loans doubled from 3.4 percent to 6.8 percent on July 1 while Congress was on their Fourth of July recess. Wednesday, Senate Democrats failed to advance a one-year, retroactive fix that would have kept rates at 3.4 percent on loans until June 30, 2014.
Republicans opted not to support the bill because it only offered a temporary one-year fix. "We'd be back here next year like groundhog day trying to fix this problem again," Sen. Kelly Ayotte, R-N.H., said on the floor after the vote, according to ABC News.
Instead, the GOP pushed a bill that would tie loan rates to 10-year Treasury bonds. Although the GOP-backed bill would cap consolidated loans at 8.25 percent interest in future years, Democrats rejected the plan because it would not cap interest rates for new loans, which could fluctuate.
Democratic Senate Leader Harry Reid insisted that rates must not be allowed to rise in the future on newly issued loans. "All the [Republican] proposals, within two years -- at the outside, three years, makes the rate more than 6.8 percent," he said on Tuesday.