WASHINGTON (Reuters) - U.S. Senate Democrats and Republicans on Thursday blocked each other's proposals to extend low-interest federal student loans as a deadline neared for an anticipated election-year compromise.
On a mostly party-line vote, Republicans stopped a Democratic bid to fund a one-year renewal of the 3.4 percent interest rate by eliminating a tax loophole for the wealthy.
Democrats fired back, also on a mostly party-line vote, by blocking a Republican plan to cover the $6 billion cost by taking money from President Barack Obama's overhaul of the U.S. healthcare system.
Republicans and Democrats angrily accused each other of playing political games and refusing to negotiate in good faith.
But they are expected to reach a deal before the interest rate on college loans is set to double on July 1 to 6.8 percent for more 7 million students.
Neither side wants to upset students and their parents before the November 6 general election when control of Congress and the White House will be up for grabs.
Obama made the 3.4 percent interest rate an issue in campaign-style speeches at college campuses last month, calling on Congress to renew it.
Republicans accused Obama of trying to manufacturer a crisis. But when presumptive Republican presidential nominee Mitt Romney said he also favors extension of the lower rate, his party members in Congress stepped up efforts to do it.
In debate on Thursday, Senate Democratic Leader Harry Reid said, "American students should know Democrats will not relent until Congress has taken action against the skyrocketing price of higher education."
Senate Republican Leader Mitch McConnell said, "The American people are tired of the posturing and the games. It's time for the president to lead - and it's time for Senate Democrats to stop the political theater and find a real solution."
Given the two parties' disagreement over how to pay for extending the low loan rates, one option is to not cover the cost and instead add the $6 billion to the national debt, a move that would not be well received by conservatives.
(Reporting by Thomas Ferraro; Editing by Xavier Briand)