WASHINGTON -- Two dueling bills to avert an increase in the interest rate for new, subsidized federal student loans July 1 both failed to advance in the Senate on Thursday, illustrating the divide between the parties on how best to avoid the rate hike. A Republican bill to set the interest rate based on market rates failed, 40-57, although it was similar in many ways to President Obama's original solution in his 2014 budget request. A Democratic bill to freeze the rate for subsidized student loans at 3.4 percent for two years won a slim majority, 51-46, but didn't get the 60 votes needed for procedural reasons.
While the Obama administration has long favored a long-term solution based on market rates, Obama endorsed the Democratic bill for a short-term fix, saying averting the rate hike is the most important factor.
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