WASHINGTON (AP) -- The Democratic-controlled Senate has voted down a Republican proposal to link student loan interest rates to the financial markets.

The Senate on Thursday was scheduled to next take up Democrats' proposal that would extend current interest rates on new subsidized Stafford loans for the next two years at 3.4 percent. Without congressional action, the rates are set to double on July 1.

Senate Republicans sought to peg interest rates to 10-year Treasury notes, meaning rates would be lower in coming years but rise as the economy improves. It is similar to a bill the Republican-led House passed earlier that President Barack Obama said he would veto.

The chairmen and ranking members from both chambers' education committees were looking to pass measures quickly and then resolve differences later.

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