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Dueling Student Loan Bills Rejected in Senate

Hemera/Thinkstock(WASHINGTON) -- The Senate made one last gesture this month to work on the Student Loan bill, but Democratic and Republican versions both failed in a last-minute, and half-hearted, attempt Thursday before lawmakers leave for a week-long Memorial Day holiday.

The Democratic bill failed by a 51-43 vote. The Republican alternative failed by a 34-62 vote. Both bills needed 60 votes for passage.

Both Republicans and Democrats believe the subsidized Stafford loan rates should not be doubled from the current 3.4 percent to 7.6 percent. Leaders of both parties say the current rates should be extended for at least another year.

But they cannot agree to how to pay for the $6 billion bill.

The Democratic plan proposes paying for the bill by raising the Medicare and Social Security payroll taxes on high-earning stock holders of some privately owned companies. Republicans oppose the measure.

“They’ve known for months that we won’t support this tax hike and that it couldn’t pass this chamber or the House of Representatives,” Senate Minority Leader Mitch McConnell, R-Ky., said Thursday morning of the Democratic proposal. “It has already failed, but they’re proposing it anyway a second time.”

The Republicans propose to pay for the bill by getting rid of a preventative health fund that was created in the health care bill. Democrats oppose this and the proposal has no chance of getting though a Democratically-controlled Senate.

“It would be a shame to use that,” Senate Majority leader Harry Reid, D-Nev., said on the Senate floor Thursday morning. “Taking more from it would really hurt the health of America.”

The Senate will be out of session next week for Memorial Day, and will have to move fast when it returns in June to prevent the student loan rates from doubling July 1. Senate Minority Leader McConnell called on President Obama to be more engaged in working toward a solution.

“If the president has got time to run around to late-night comedy shows and college campuses talking about this issue, then he can pick up the phone and work out a solution with Democrats here in the Senate,” McConnell said, “if the president really wants to pass this bill so badly, then why on Earth hasn’t he picked up the phone and spoken to the chairman or ranking member of the committee? He’s campaigned on it but not actually fixed it.”

Copyright 2012 ABC News Radio

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