The Senate last week rejected dueling Democrat and Republican proposals to extend the low interest on federally guaranteed student loans as the July 1 deadline to double the rate to 6.8% draws closer.

Both Republicans and Democrats believe the subsidized Stafford loan rates should not be doubled from the current 3.4%. But they cannot agree to how to pay for the $6-billion bill.

Consumer groups are lobbying hard for the student loan bill because 7 million young people would see an increase in their monthly payments if the rate goes up. The rate also is a key benchmark for the student loan market and helps sets the rate on private loans that are proliferating among credit unions.

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.

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.

The Senate is out this week and next week for its annual Memorial Day recess, and will have to move fast when it returns in June to prevent the student loan rates from doubling July 1.

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