Members of the House voted 392 to 31 to lower rates for undergraduates taking out government loans this school year to 3.86% -- cheaper than the 6.8% interest rate that kicked in on July 1. The new rates would be retroactive and apply to loans taken out after July 1.
The bill, which passed the Senate last week, will now go to the President Obama's desk to be signed into law.
As House members debated the bill, many Republicans took credit for the deal. They noted that the Senate version wasn't much different from their own student loan bill, which linked rates to the bond markets.
"My colleagues and I have been fighting for months for a long-term market-based solution that will serve students and taxpayers, and the legislation before us today will do just that," said Minnesota Republican John Kline, who runs the House education panel.
Unsubsidized loans and graduate loans were already paying 6.8% interest rates.
Student loan interest rates could double
The latest bill helps all students, with the basic principle being that it ties student loan rates to the bond markets.
This fall, undergraduate students will pay an interest rate of 3.86% on their loans. It is comprised of the yield on the 10-year U.S. Treasury note on June 1, plus an additional 2.05%. Graduate students will have to pay 5.41% on loans this fall, or 3.6% over the 10-year Treasury.