Split Senate Democrats labor towards student loan deal

Senate Democrats were still trying to hammer out a deal Wednesday on a student loan interest rate measure that has had Democrats squabbling among themselves and with the White House since those rates doubled on July 1.

The Senate failed to advance a short-term fix that would have brought interest rates on subsidized federal loans back to 3.4 percent for one more year. The vote on a procedural measure - requiring 60 votes for passage - failed 51-49.

But another goal is a long-term measure that could resolve the existing impasse.

A Democratic aide said last night that no deal was reached after Senate Majority Leader Harry Reid met with White House Chief of Staff Denis McDonough.

The White House – and a bipartisan group of senators that includes moderate Republicans and conservative Democrats -- has proposed a fix that does not include a cap on interest rates, a non-starter among left-leaning Senate Democrats.

The House has passed its own legislation, which does not include a cap – and which uses the money the government saves to help pay down the deficit.

The White House has said it is open to including a cap on rates as part of the proposal. It said in a statement before the Senate vote that it "strongly supported" the short-term fix that failed early Wednesday afternoon. 

Reid said Wednesday that Democrats made “progress” towards a deal in a morning meeting.

“Maybe we can come up with a compromise,” he said. “While imperfect, [like] a lot of things that happen legislatively, it will be a way for us to move forward.”

NBC's Carrie Dann contributed to this report.