An effort to reverse the doubling of interest rates on subsidized student loans failed in the Senate on Wednesday, after Democrats were unable to muster the 60 votes needed to overcome a threatened filibuster.
The Senate Democrats' bill, S 1238, which was backed by President Obama, would have returned rates on new subsidized loans to 3.4 percent for a year, giving lawmakers more time to craft a long-term fix.
The interest rate on subsidized loans doubled on July 1, after lawmakers reached an impasse on a plan to tie the rates to financial markets. Subsidized Stafford loans account for roughly a quarter of student loans issued by the federal government. Unsubsidized Stafford and PLUS loans, which make up the remainder, already carry rates of 6.8 percent or higher.
If Congress fails to restore the rate on subsidized loans to 3.4 percent, roughly seven million students will face higher borrowing costs, with the average borrower paying $2,600 more over a standard 10-year repayment period, according to Democratic estimates. For most students, however, the monthly increase will be modest, amounting to roughly $7 to $9 per payment.
Meanwhile, the Congressional blame game continued, with both sides accusing each other of refusing to negotiate, while calling on their opponents to "put partisan politics aside" and pass a bill.