The house is expected to take the bill up and pass it as early as this week.
"Anytime you can keep the interest rates lower for education, it's great. People are trying to better their lives, so why not help them out," says master’s student, Liz Benning.
The deal comes just weeks after Congress let interest rates on federal loans double from 3.4 percent to 6.8 percent.
Under the compromise undergraduate government loans go back to 3.86 percent.
The rates are also tied to future financial markets and will cap at 8.25 percent.
The deal passed the Senate on an 81 to 18 vote. Senator Lee, from Utah was the only republican to vote no.
In a statement to ABC 4 Utah Lee says, “Congress should open the higher education market to competition and innovation.”
He also says, “The legislation doesn't come close to solving any problems and that's why I can't support it.”
Students on the front lines say it solves problems they deal with every day.
"It increases the knowledge, it increases the value of an education. It's much more motivating to be able to go to school without worrying about the loans," says master’s student, Ann Bybbe.
Once this bill does make its way through Congress the White House has indicated it will support it as well.