Senate Republicans stopped a measure Tuesday that would raise taxes to keep student loan interest rates low.
The legislation lost a vote of 52 to 45, putting more pressure on lawmakers to act before interest rates double for millions of students on July 1.
The student loan payment debate has led to lots of political blame heading into the November election.
"The Senate has ceased to be a place where problems are resolved. It's become instead a place where Democrats produce campaign material," Senate Minority Leader Mitch McConnell, R-Ky., said.
Prior to Tuesday's vote, Democrats accused Republicans of caring more about the rich than America's students. Meanwhile, GOP leaders say Democrats are trying to create campaign issues instead of addressing the nation's bigger problems, like skyrocketing debt.
The House has already passed a bill to prevent the interest rate increase. But President Barack Obama promised to veto that measure because of the way Republicans want to pay for it.
A 2007 law approved by a Democratic Congress gradually lowered federal student loan interest rates but reverts them back up to 6.8 percent in July because lawmakers were worried about costs.
The Education Department projects the measure would affect 7.4 million undergraduates.