Washington ( CNN ) -- With time running out for Congress to prevent a doubling of interest rates on federal student loans , the White House and Republican leaders exchanged accusations Thursday on who was to blame for the lack of an agreement . President Barack Obama chided Republicans for holding up a deal with unreasonable demands , and he urged college students to continue raising their voices on the issue . However , spokesmen for Republican leaders in the House and Senate denied an assertion by press secretary Jay Carney that the White House has been working with them to try to reach a deal . Asked about GOP complaints that the White House has not reached out to Republicans on the issue in recent days , Carney said that `` we are actively working with members of Congress to get this done , '' adding , `` in both parties . '' Spokesmen for House Speaker John Boehner , R-Ohio , and Senate Minority Leader Mitch McConnell , R-Kentucky , disputed Carney 's account . On the Senate floor , McConnell accused Obama and Democrats of playing political games on the issue . `` It is the Democrat-led Senate that has failed to act and the president who has failed to contribute to a solution , and the reason is obvious , '' McConnell said . `` It was reported yesterday that the Democratic Congressional Campaign Committee is launching a website with a student loan countdown clock aimed at raising money off this issue . The implication is that Republicans are the ones dragging their feet. `` The only reason the issue remains unresolved `` is that the president wants to keep it alive , '' McConnell said , adding that `` he thinks it benefits him politically for college students to believe we 're the problem . '' Despite such political back-and-forth , Senate Majority Leader Harry Reid , D-Nevada , said that `` a series of meetings over the last 48 hours '' with Republicans had raised hopes for a deal . `` At this stage , it appears that they are compromising , just as we are , and hope we can get something done , '' Reid said . Leaders of both parties insist that they want to keep the federally backed rate at 3.4 % for another year , but they sharply disagree over how to pay the $ 6 billion cost . Democrats want to eliminate certain tax benefits for small-business owners , while Republicans want to cut a preventive-care fund created in 2010 as part of Obama 's health care reform law . The Republican-majority House has passed its version of the measure , which Obama has threatened to veto . The Senate continues to negotiate an alternative version . If Congress fails to act by July 1 , the rate jumps to 6.8 % , with an average cost to students of $ 1,000 in increased loan debt , according to the White House . In his remarks at the White House to students campaigning for an extension of the current rate , Obama blamed Republicans for preventing a deal . `` Last month , Democrats in the Senate put forward a plan that would have kept these rates in place without adding a dime to the deficit . Unfortunately , Senate Republicans got together and blocked it , '' Obama said . `` Over in the House , the Republicans said they 'd keep these rates down only if we agreed to cut things like preventative health care for women , which obviously would n't fix the problem but would create a new problem , '' the president continued . He also poked fun at an unidentified congressman , presumably Republican , who Obama said had warned that the student loan rate issue was about giving students `` free college education . '' That complaint `` does n't make much sense , because the definition of a loan is , it 's not free ; you have to pay it back , '' Obama said . While Obama has repeatedly raised the issue in campaign appearances , certain GOP presidential nominee Mitt Romney has also said Congress should act to keep the rate at 3.4 % . In 2007 , lawmakers temporarily cut the rate for undergraduates taking out federal Stafford loans up to the 2011 school year . The lower rates were phased in , so students have been able to access the lowest 3.4 % rate on subsidized federal loans for only one school year . The 2007 law allows interest rates to revert back to 6.8 % for the 2012-13 school year , which starts in July . CNN 's Jessica Yellin , Alan Silverleib and Ted Barrett contributed to this report .
NEW : Sen. McConnell says it is Democrats stalling progress to score political points . The president urges Congress to prevent interest rates on student loans from doubling . Senate Majority Leader Reid says recent talks provide hope for a resolution . Without action , the current 5 % interest rate will rise to 6.8 % at the end of October .