In a move that will affect close to half of Cornell's students, on Sept. 27 President George W. Bush signed the College Cost Reduction and Access Act, which went into effect Oct. 1.

Though the White House threatened to veto the bill, both Congressional houses sent the bill to the president with veto-proof majorities, passing by a 292-97 vote in the House and a 79-12 vote in the Senate.

The legislation cuts $20.9 billion in subsidies to private-sector lenders who make federally guaranteed Stafford and Plus loans and redirects the funds to students, making this the largest student-aid increase since the G.I. Bill of Rights was signed in 1944.

The act will increase the amount students receive in Pell grants to $5,400 a year by 2012, up from $4,050 in 2006. In 2005-06, 1,902 Cornell students received Pell grants, which are need-based and are not repayable.

The act also reduces interest rates on federal Stafford student loans to 3.4 percent over five years, from 6.8 percent. In 2005-06, 47 percent of Cornell students received financial aid.

"The reduction in interest on federal Stafford loans will make it a lot easier for students to repay their loans," said Tom Keane, director of financial aid and student employment at Cornell. The new interest rates do not apply, however, to alternate loan programs, largely from banks and loan companies, which carry rates based on market conditions, Keane added.

The act also guarantees that, starting July 1, 2009, borrowers in the Stafford program will never have to spend more than 15 percent of their yearly income on loan repayments. It also provides that borrowers at certain income levels will have the unpaid balance on loans forgiven after 25 years.

Borrowers who work in public-sector jobs, such as the military, law enforcement, firefighting, nursing, early childhood teachers and more, will have the balance of their loans forgiven after 10 years of service and loan repayment.

Also starting in 2009, the government will limit the right to offer Plus loans to two lenders in each state. Formerly, all qualified lenders could offer Plus loans.

Another measure of the bill provides upfront tuition for top-performing students who commit to teaching in high-needs schools upon graduation. Since Cornell does not offer an undergraduate education degree, this benefit only applies to graduate students in the Cornell Teacher Education program.