Legislation overhauls education financing

The bill could not have come at a better time for many students as a report recently released by the Campaign for America's Future (CAF) revealed that undergraduate tuition increased by 37 percent in the last six years.

"We've needed to take a look at financial aid for a very long time," Hollis said. "More and more students have had to look to college loans because need-based grant aid hasn't kept up with the cost of going to college."

Under the new law, college students will see their interest rates on subsidized loans cut from 6.8 percent to 3.4 percent by 2011. The typical student borrower in Texas with $14,233 in need-based debt will save $4,550 over the life of a loan.

The maximum Pell Grant will increase by $1,090 from $4,310 to $5,400 over the next five years. The measure will help 427,159 Texas students and 5.5 million students throughout the country.

"It's been way too long since Pell grants have seen an increase. This will help the neediest of students get the college education they deserve," Hollis said.

The legislation also prevents students with loans from facing unmanageable levels of federal debt by guaranteeing that borrowers will never have to spend more than 15 percent of their annual income on loan repayments.