The Senate voted 52-45 along party lines. The vote was largely symbolic because the Democratic bill had no chance of approval by the GOP-led House.
The $6 billion measure would extend the 3.4 percent interest rate on subsidized Stafford loans for another year. Without congressional action, rates would grow to 6.8 percent.
Republicans said they blocked the Senate from debating the bill because they oppose how Democrats would pay for it: Boosting Social Security and Medicare payroll taxes on high-earning stockholders of some privately owned corporations.
"They're sending a clear message that they'd rather protect wealthy tax dodgers, and that's what they are, than help promising students achieve their dreams of higher education," said Senate Majority Leader Harry Reid, D-Nev.
GOP senators want a vote on their own version heading off the interest rate increases and paid for by eliminating a preventive health fund created by President Barack Obama's 2010 health care overhaul, but that financing idea has no chance of passing the Democratic-run Senate and has drawn a veto threat from the White House.
The Republicans and Democrats know they need a bipartisan pact on financing the measure, and they are both motivated to because in the months before the presidential and congressional elections, neither wants to be blamed for letting college costs grow for students and their families struggling in the weak economy.
The Associated Press contributed to this report.