In 2007, Congress passed the College Cost Reduction and Access Act, which made provisions for an additional $2 billion for Pell Grant, income based repayment, and reductions in interest within the next four years. With more than 5.5 million undergraduates borrowing every year, these new provisions could save those who consolidate their loans thousands of dollars.

The new interest rates are scheduled to change annually on July 1. Rates for the 2008–09 school year are locked in at 6 percent. These rates will decline during 2009–10 to 5.6 percent; 2010–11 to 4.5 percent; and 2011–12 will be 3.4 percent. Because students will graduate with loans at different interest rates, they can now consolidate with a weighted average of percentage.

"I expect to have $85,000 in loans when I am done," said ITT Tech software engineering major Chad Dailey. With a loan consolidation of his total debt averaging 7.5 percent, his monthly payments on a 15 year repayment plan would be approximately $788 per month. However, the decrease in interest for Stafford loans means Dailey can consolidate his loans into the Direct Loan Program and pay an interest rate of 6.2 percent.

Dailey's payment would be $727 per month and he would have a total savings of $10,980 over the life of his loan.

"I have a little over a year remaining in school and I am more scared of the loan payments than I am of finding a well paying job," said Dailey.

That sentiment was echoed by Pellissippi State's engineering technology major Paris Cornwell, a former marine who served in Iraq and who is now enlisted in the Air Guard. "Even after serving my country and receiving the G.I. bill, I still expect to have around $27,000 in loans," he said.

When Cornwell was told his payments on 6.8 percent for 15 years would be approximately $240 per month, his reply was, "that is almost a car payment or half a mortgage payment, and it is scary to think about".

With the new interest rates, Cornwell's payment would drop to $230 per month but he would have $1,800 in savings over the life of his loan.