Without congressional action, interest rates on federal student loans will double starting July 1.
Senate Republican Leader Mitch McConnell of Kentucky says the GOP and Democrats agree that interest rate decisions should be taken out of the hands of politicians, and that interest rates should be based on economic factors. However, disagreements remain over specifics, like how fast and high the rates could rise.
On the Senate floor Tuesday, McConnell said young Americans already have enough to worry about without Washington creating more problems for them.
"The youth unemployment rate for 20 to 24 year olds is over 13 percent," asserted McConnell. "In Kentucky, it’s more than 14 percent. And once many students graduate college, they face a highly uncertain future."
Rates on all federally-backed student loans are set to jump from 3.4% to 6.8% next month.
Under a Democratic proposal, interest rates would be left alone for two years as Congress works on permanent reform. The extension would be funded through the elimination of some tax breaks.
Republicans have put forward a bill that would employ a variable market rate, like a mortgage, that doesn't change over the life of an individual student's loan.