Last summer, Congress approved a one-year extension of the 3.4 percent interest rate for subsidized Stafford loans at a cost of nearly $6 billion.
The current rate is set to July 1 and, without action, will double to 6.8 percent and affect millions of borrowers.
“Not only will this bill bring loan payments down for students, but it will also provide a long-term solution to this issue," Burr said.
But a straight extension would, once again, cost $6 billion, an amount that may be difficult to conjure and offset amid a budget-cutting fervor.
“This proposal is fairer to all students who are borrowing taxpayer dollars to continue their education,” Alexander said.
“Instead of short-term, expensive fixes that only help a few students who have federal loans, such as the one Congress passed last year, this bill will tie all interest rates to the market through a simpler, fairer system that lowers costs for students who take out federal loans to pay for college next year and saves taxpayer dollars.”
President Obama, who has said he wants a permanent solution, could include a fix in his 2014 budget set for release on Wednesday morning.
That would run counter to the House Republican and Senate Democratic budgets, which have already moved through their respective chambers.
The House budget allows rates to climb as part of an effort to balance the budget, while the Senate did not set aside funds to cover the cost, although the blueprint was supportive of holding down rates.
Meanwhile, a couple of congressional committees are tackling the issue ahead of the increase, which could possibly lead to a compromise before rates go up in about three months.