Let's do a rough calculation:
Take your 5 students, each requesting a 100 kbyte file, exactly at the same instant.
Let's also assume that each one hat a 500 kbit/s (download) broadband connection.
Then for 100*8/500 = 1.6 seconds each line'll try to download at those 500 kbit/s. That'll request 2.5 Mbit/s from the computer - which is not a big deal for a modern machine.
But as you pointed out the T1 can deliver only 1.54 Mbit/s, so that will throttle the whole thing.
Assuming all lines to be identical, the server will be able to deliver 1540/5 = 308 kbit/s per line and the students have to wait 2.7 s for the file.
The point is: even if you have a super computer on this side, the students have to wait those 2.7 seconds on the other side!