Most Senate Republicans who pushed for interest rates to be linked to the financial markets were likely to vote for the measure. It was negotiated by Democratic Sen. Joe Manchin of West Virginia and GOP Sens. Richard Burr of North Carolina and Lamar Alexander of Tennessee, the top Republican on the Senate Health, Education, Labor and Pensions Committee.
"You want to help the middle class? This is where the middle class is," Manchin told his colleagues. "We all came here to help our constituents."
The compromise negotiated in the Senate closely hews to what House Republicans passed this year, and that's a sticking point for some liberals.
Sen. Jack Reed, D-R.I., pushed for an extension of the current 3.4 percent rate so lawmakers could address the subject this fall during the revision of the Higher Education Act.
"At some point, it's going to be a much worse deal," Reed said. "It goes up and up and up and up."
The Congressional Budget Office estimated the bill as written would reduce the deficit by $715 million over the next decade. During that same time, federal loans would be a $1.4 trillion program.
"We've got to get out of the business of making profits of struggling families who want nothing more than to be able to send their kids to college," said Sen. Bernie Sanders, a Vermont independent who caucuses with Democrats. "This legislation only makes a bad situation worse."