Senate Votes Leave Student Loan Interest Rate Issue Unresolved

The U.S. Senate has voted down two measures that would have addressed a prospective doubling of subsidized federal student loan interest rates on July 1.

On procedural votes, the Senate rejected a Republican proposal that would have tied student loan interest rates to the rate on the 10-year Treasury note, plus 3 percentage points. The Senate also rejected a proposal from Senate Democrats to extend the current 3.4 percent interest rate on subsidized Stafford loans for two more years.

The U.S. House previously passed legislation tying student loan rates to the 10-year Treasury note rate.

Absent additional legislation, rates on subsidized loans are scheduled to rise to 6.8 percent, effective July 1.

Despite the votes, both Senate Democrats and Republicans pledged additional steps to work out a compromise to head off the rate increase. And the Congressional Budget Office has issued a new report estimating the federal costs, or potential savings, of various student loan interest rate scenarios.