* Part of Democrats' "fair shot" election-year agenda
* Anticipated cost generates Republican opposition (Adds Republican Senator Flake voicing cost concerns)
By Thomas Ferraro
WASHINGTON, May 14 (Reuters) - U.S. Senate Democrats unveiled legislation on Wednesday to allow millions of Americans with student loan debt to refinance at lower interest rates.
Democrats said their measure would let holders of both federal and private undergraduate loans - some with rates of 9 percent or higher - to refinance at 3.86 percent.
Drafted in coordination with the White House, the bill is part of Senate Democrats' 2014 legislative agenda aimed at giving all Americans "a fair shot" and rallying the party's liberal base in advance of the November elections.
But like earlier rejected measures to raise the minimum wage and renew expired long-term jobless benefits for millions of Americans, it faces Republican opposition that could kill it.
"This bill would be hugely expensive," said Republican Senator Jeff Flake of Arizona. "I don't think it will be seriously considered."
Democrats control the Senate, 55-45, but need 60 votes to clear Republican procedural hurdles.
Democratic Senator Elizabeth Warren, a chief sponsor of the bill, said she expected bipartisan support.
"Student loan debt is a real and growing crisis that is crushing young people and dragging down our economy," Warren said.
"When interest rates are low, homeowners, businesses and even municipalities refinance their debt. But right now the government doesn't offer a refinancing option to students," she noted. "Allowing students to refinance their loans would help give them a fair shot at an affordable education."
Last year, Congress approved the Bipartisan Student Loan Certainty Act of 2013, which set the undergraduate student loan interest rate at 3.86 percent for the current school year.
Democrats said the nonpartisan Congressional Budget Office will determine the cost of their bill, which would permanently let student-loan borrowers refinance at the going rate.
Democrats propose that the cost of their bill be offset by reducing tax breaks for millionaires.
Democrats cited federal data showing that student-loan debt grew by $31 billion from January to March, to total $1.1 trillion, making it the fastest-growing household debt category.
Overall, about 40 million Americans have student loan debt, Democrats said. (Reporting by Thomas Ferraro; Editing by Dan Grebler and Eric Walsh)