The U.S. House of Representatives passed a bill that would reverse a recent hike in federal student loan interest rates, lowering them to 3.86 percent for undergraduates in the new school year, Reuters reported.

The House voted 392-31 in favor of the bill that will switch interest rates to a market-based system.

The bill pegs interest rates on student loans to the 10-year Treasury note plus 2.05 percentage points for undergraduates, and plus 3.6 percentage points for graduate loans. That means rates will initially be low for new borrowers but could go up if the economy improves.

Interest rates on student loans automatically doubled on July 1 to 6.8 percent from 3.4 percent after Congress failed to meet the deadline to prevent the rate increase.

Congress has since sought a retroactive fix that would keep new borrowers from paying the higher rate.

The bill, a result of extensive negotiations in mid-July among a coalition of U.S. senators composed of Democrats, Republicans and an independent, now waits to be signed into law by President Barack Obama.