The Turnbull government's $23.5 billion package passed the Senate by 34 votes to 31, following a marathon debate which lasted into the early hours of Friday morning.
The funding changes were fiercely opposed by the Catholic school sector, which claims it will lose money, but the new needs-based system will benefit many independent schools.
Sydney's Giant Steps, an independent school for kids with autism, currently charges no fees and relies largely on donations.
That burden could be eased under the federal government's new funding package.
Principal Kerrie Nelson said funding per student will jump from $15,000 to $53,000.
"It's a really fundamental, really exciting funding package that we're seeing,” she told SBS.
The school hopes to enrol more students and fund extra programs.
The federal government has promised each student on average will get an extra $2300 under its new plan.
However, 24 non-government schools will have their funding cut and 350 will see a slower rate in funding growth.
The package is still calculated based on where parents live; those in richer suburbs will pay extra fees, while schools in less well-off areas will get more money.
Some schools due to have their funding cut are still coming to terms with the changes.
The principal of Sydney's Christian Covenant School, Bill Rusin, said the school will suffer a $1.4 million loss over a decade.
"It works out to be about $140,000 a year we lose every year for ten years so that's going to cause us to rethink a few things,” he said.
While some schools have threatened fee hikes, Mr Rusin is still trying to work around it.
"We're hoping very much that it's not going to cause any significant fee hikes.
“We've known this has been coming for some years so we've been making some preparations.”
