Senate Tanks Student Loan Bill, May Raise Interest Rates

Senate Tanks Student Loan Bill, May Raise Interest Rates

Bad news, college grads.

Actually, bad news, everyone: The student loan bill, which we've previously discussed in detail, failed in the Senate.

This means that unless another agreement is reached by July 1st, student loan interest rates will spike to 6.8% from the current 3.4%.

The Washington Post reports that the problem isn't whether or not student loan rates should stay low—both Democrats and Republicans agree it's the right move. The disagreement is over how to pay for it.

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Republicans want to cut $6 billion from the preventative health care plan, while Democrats want to end tax breaks for certain types of S corporations, or S corps, which are firms with 100 or fewer shareholders.

There isn't an agreement yet, but considering that the plan fell only eight votes short of the 60 required to approve it, there might be time enough before July to put something else in place.

Update, May 10: An earlier version of this story incorrectly stated the number of maximum shareholders allowed in an S corporation. It is 100, not three, or fewer. However, the Democrats would like to change tax breaks for S corporations with three or fewer shareholders.

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