The College Cost Reduction and Access Act, passed in September of 2007, is taking effect this week on July 1st. The act provides for need-based student loan interest to be cut in half by 2011, and the first rate cut – from 6.8% to 6.0% -- has been made. Nearly 6.8 million students borrow need-based federal loans each year, and the current rate cut will save a student borrower with $13,800 in loans an average of $4,400 over the life of the loan. Low and middle-income students, many of whom are minority students, will benefit most from this rate cut; about 38 percent of African-American students and 25 percent of Hispanic students take out need-based student loans each year. The College Cost Reduction and Access Act will also increase the Pell Grant scholarship by $490 (raising the maximum award to $4,731) and provide up-front tuition assistance of $4,000 each year for students who commit to teaching high-need subjects in high-need public schools upon graduation.

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