Federal student loan interest rates will increase about 2 percent to a fixed rate in July. Some student loan officials are urging students to consolidate their loans in order to benefit from the increase.

Starting July 1, interest rates for students taking out new loans will rise from 4.7 percent to 6.8 percent, and Parent Loans for Undergraduate Students (PLUS) interest rates will increase from 6.1 percent to 8.5 percent because of the recent Deficit Reduction Act.

Loan interest rates are variable and subject to change at any time depending on the economy, said Melissa Kunes, Penn State federal and state aid program director.

But the Deficit Reduction Act now ensures that interest rates for students who already have loans will remain fixed at 4.7 percent. A student who already has college loans will not experience the increase.

Penn State Executive Student Aid Director Anna Griswold said she believes some students may express concern, but they should not be too worried about the increase because it is created for their benefit. By having a fixed interest rate, students can have the security of their rates not increasing while in school, she said.

If students have fixed interest rates, they will likely pay less interest after graduation than if their rates were constantly changing, she added.

"By coming into college with a fixed rate at 6.8 percent, students are protected," Griswold said. "This guarantees a student will never be penalized by higher rates. It is very predictable."

Even though Penn State cannot do much to change the increasing interest rates, Christopher Penn, chief technology officer at Student Loan Network, said he believes it is a good idea for current students to consolidate their loans before July 1.

Under the Deficit Reduction Act, only graduating students will have the opportunity to consolidate loans.

"You will be able to lock in the interest rate at today's rate at 4.7 percent," Penn said. "This should be done as soon as possible. If students wait, their loans will be all over the place."

Wayne Hood, PNC Bank Education Lending Group president, said he agrees that consolidation is a good idea for college students to consider, adding that a rush of people will consolidate their loans in the very near future. The Deficit Reduction Act was brought about four years ago. The act passed on Jan. 19, 2006, but will not take effect until early July. Kunes said the extended time period gave interest rates a chance to adjust to the new fixed rates.

"Now the rates can be counted on," Kunes said. "Parents and students don't have to wonder what the rates will be from year to year, and now people can plan better."

Kunes said she does not believe there is much students can do in order to avoid the increase.

Penn State spokesman Tysen Kendig said he is unsure how the increase will affect the university.

"It is hard to say," Kendig said. "On the surface, anything increasing education costs will be a negative thing. However, I am not sure of any tangible impacts this may have on Penn State."

Kendig also said there is not much Penn State can do except to increase efforts to get more college grants and scholarships that are already in place.

Lian Abad (sophomore-media studies) is still concerned with the increase. "I think this is sort of ridiculous," Abad said. "College is expensive enough, and continues to be more and more expensive. The last thing I want is higher interest rates, too."