Senate Minority Leader Mitch McConnell, R-Kentucky, said Democrats "wanted a scapegoat more than a solution."

Story highlights

A 2007 law allows interest rates to revert back to 6.8% for the 2012-2013 school year

Over 7 million undergraduates with federally subsidized loans would be affected

Average cost to students would be $1,000 in increased loan debt, White House says

Washington CNN  — 

The Senate, in the latest round of political maneuvering on a popular campaign issue, Thursday rejected competing Democratic and Republican proposals to prevent student loan rates from doubling to 6.8% in July.

While leaders of both parties insist they want to keep the federally backed rate at 3.4% for another year, they sharply disagree over how to pay the $6 billion tab necessary to do so. Senate Democrats want to eliminate certain tax benefits for small business owners, while Senate Republicans want to cut a preventive-care fund created in 2010 as part of President Barack Obama’s health care reform law.

Senators rejected the Democratic plan in a 51-43 vote; they rejected the GOP proposal in a 34-62 vote. Sixty “yes” votes were necessary to win Senate approval.

While neither measure was expected to pass, leaders on both sides of the aisle wanted the opportunity to vote for their plan instead of merely voicing opposition to the other party’s proposal.

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Before the vote, Senate Democrats accused their Republican counterparts of unnecessarily pitting educational needs against health care priorities.

“I hope a few reasonable Republicans will join Democrats in voting for a student loan bill that doesn’t put Americans’ health at risk,” said Senate Majority Leader Harry Reid, D-Nevada. “American students should know Democrats will not relent until Congress has taken action against the skyrocketing price of higher education.”

For their part, Senate Republicans blasted Democrats for allegedly playing political games instead of seeking a resolution on an issue repeatedly raised by Obama on the campaign trail.

“This problem could have been solved weeks ago,” argued Senate Minority Leader Mitch McConnell, R-Kentucky. But “Democrats weren’t interested. They wanted a scapegoat more than a solution.”

If Obama has “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 in the Senate.”

House Republicans recently passed an identical version of the bill pushed by their Senate GOP colleagues. Obama has vowed to veto the measure if it ever reaches his desk.

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If Congress fails to act by July 1, more than 7 million undergraduates with federally subsidized loans for next year’s tuition will have to pay substantially more to eliminate their debt.

The average cost to students would be $1,000 in increased student loan debt, according to the White House. While Obama has repeatedly raised the issue in campaign appearances, presumptive GOP presidential nominee Mitt Romney has also said Congress should act to keep the rate at 3.4%.

In 2007, lawmakers temporarily cut the rate for undergraduates taking out federal Stafford loans up to the 2011 school year. The lower rates were phased in, so students have only been able to access the lowest 3.4% rate on subsidized federal loans for one school year. The 2007 law allows interest rates to revert back to 6.8% for the 2012-2013 school year, which starts in July.

CNN’s Ted Barrett and Jennifer Liberto contributed to this report.