The variable interest rate on student loans originated prior to July 1, 2006, will increase by 0.08 percent starting July 1, 2007, the U.S. Department of the Treasury just announced.

Variable interest rates starting on July 1, 2007 will be:

· Stafford (in-school/grace period): 6.62%

· Stafford (in repayment): 7.22%

· PLUS: 8.02%

Rates on federal loans originated on or after July 1, 2006, remain fixed at 6.8% for Stafford, 7.9% for DL PLUS, and 8.5% for FFEL PLUS.

The good news for graduates is that you don’t need to rush into consolidation to lock in a great rate before the rate increase goes into effect — the fixed rate you would get before July 1 is likely going to be the same as the rate a few months later. This is because the rate increase is so slight and because consolidation rounds up to the nearest .125% (one-eighth percent).

Because of this, take your time and figure out if consolidation makes sense in your situation. Two factors to consider are simplicity and savings: use consolidation to enjoy the ease of having all of your federal loans with one lender and as a way to move your loans to a lender with better borrower benefits to reduce the cost of your loans. So shop around and take the time to evaluate consolidation lenders. Find the one that offers you real savings and don’t worry about the new rates deadline.