A bill that would have allowed borrowers to refinance their student loans at lower rates received only 56 votes in the Senate, short of the 60 needed to advance.
The proposal, drafted by Sen. Elizabeth Warren (D-Mass.), would have let millions of borrowers -- some of whom are paying interest rates greater than 7 percent -- refinance at current rates below 4 percent. The so-called Buffett Rule, which would set minimum tax rates for people making over $1 million, would have paid for the law.
Student loan debt has surpassed $1 trillion and has been accused of hindering the economy, making the issue a popular topic among politicians ahead of mid-term elections. The vote came after President Obama highlighted the issue from the White House, announcing an executive action to let more borrowers cap their monthly payments at 10 percent of their income. The Obama administration said the rejected bill could have helped about 25 million borrowers save $2,000 each over the life of their loans.
About 40 million Americans now have outstanding student loan debt, making it the second-largest form of consumer debt after home loans, according to Warren’s office. Consumers aged 60 and older account for about $43 billion of outstanding student debt.