If Congress fails to act in a manner the administration can support, the interest rate on new subsidized Stafford loans for undergraduate students would double from 3.4 percent to 6.8 percent, affecting more than 7 million college students in the coming school year, the White House said in a statement.
"Taking action to stop the doubling of these rates will save students $1,000, on average, over the life of their loans," the statement said.
However, Sen. Jon Kyl, R-Ariz., said Republicans would defeat a procedural vote to end debate Tuesday, Roll Call said, despite a signaled desire by lawmakers to pass legislation that would avert an interest rate hike.
"We'll defeat cloture," Kyl, the Senate minority whip, said of the vote to limit debate. The cloture motion requires 60 votes to break a filibuster and move forward on the bill.
Kyl said the GOP's position was meant to spur talks between House Republican leaders and Senate Democratic leaders so that a compromise can be reached before the July 1 deadline.
The Democratic student loan bill would cover the bill's $6 billion cost by closing a corporate tax loophole allowing wealthy individuals to pay less in Social Security and Medicare taxes. Senate Republicans said they prefer a pay-for similar House-passed version, which would offset the interest rate cut costs by eliminating a fund in the 2010 healthcare overhaul that covers prevention and public health.