A bill to cut interest rates from 6.8 percent back to 3.4 percent, supported by Senate Majority Leader Harry Reid of Nevada and other Democrats, was blocked by a filibuster and fell eight votes shy of the 60 needed to advance.
Even if it passed, the measure would have been nothing more than a stopgap measure, locking in the 3.4 percent rate for another year and ensuring that lawmakers would be debating the issue again in 2014.
In the minutes after Wednesday's vote, Mr. Reid took to Twitter and blamed the bill's failure on Republicans and cited the fact that "a majority of the Senate" backed his bill.
But leaders in the House — which has passed a long-term solution that would tie interest rates for federal Stafford loans to financial markets — accused Senate Democrats of playing "political games" while leaving students out in the cold.
"We have a near-perfect opportunity for bipartisan, bicameral agreement on an issue affecting students and their families, yet Majority Leader Reid continues to force action on a shortsighted plan that is completely out of touch with the priorities of the White House and the American people," said Rep. John Kline, Minnesota Republican and chairman of the House Education and the Workforce Committee.
"A cadre of Senate Democrats are completely unwilling to compromise. It's time to stop playing spiteful political games," he said.
The White House has expressed support for the type of measure passed by the House. So, too, have some Senate Democrats such as West Virginia's Joe Manchin III, who has co-sponsored a bipartisan bill to tie rates to the market while establishing a cap at 8.25 percent.
But that approach has been a nonstarter with Mr. Reid and a majority of Senate Democrats, who in recent months have proposed long-term fixes that call for the government to impose lower interest rates on students and make up the lost revenue by closing a variety of tax loopholes.
On Wednesday night, however, Senate Majority Whip Richard J. Durbin, Illinois Democrat, hosted a meeting of several key lawmakers of both parties. According to reports, the Manchin plan was the basis for the talks and a deal could be made public as early as Thursday.
Mr. Reid said earlier in the day that progress has been made in hammering out an agreement, though it remained unclear whether the Senate will pass a bill before the August recess.
One Democrat and one independent joined all 46 Republicans in their filibuster, and Mr. Reid ended up switching his vote at the end as a parliamentary tactic to be able to hold a revote later. That left the final tally at 51 votes in favor of the bill and 49 opposed.