A long-sought student loan deal is finally headed to President Barack Obama for a signature.
The House of Representatives passed a bill with bipartisan support Wednesday evening that will lower interest rates on certain federal student loans while tying rates to the government's cost of borrowing money.
The deal, which was approved by the Senate last week, links interest rates to 10-year Treasury notes instead of letting Congress determine the rates. Rates could go up as the economy improves and it becomes more costly for the government to borrow money, but only for new loans. The interest rate for each individual loan will remain the same as when the money was first borrowed.
Under the plan, instead of paying 6.8 percent interest, current undergraduates will pay about 3.9 percent interest on their Stafford loans this fall. Graduate students will pay about 5.4 percent in interest this fall while parents will face around 6.4 percent interest rates.
There's also a limit. The bill caps interest rates at 8.25 percent for undergraduates and 9.5 percent for graduate loans. The cap for parents is 10.5 percent.
Rates on subsidized Stafford loans had doubled July 1 to 6.8 percent after lawmakers failed to reach a compromise to avert the increase. But the new rates will apply retroactively to loans taken out after that rate hike.
The deal comes just as Congress is set to adjourn for an August recess and after months of bickering between Republicans and Democrats over how to address the issue.
While the deal doesn't have universal support, it has the blessing of the White House and top lawmakers in Congress, including House Speaker John Boehner (R-Ohio) and Senate Majority Leader Harry Reid (D-Nev.).
President Obama is expected to sign the bill shortly.