Interest rates for student loans are at their lowest point in history; however, rates will increase beginning July 1.

Experts at Iowa State are urging students to consolidate their loans before rates rise.

“The student body at Iowa State could stand to save a conservative estimate of $25 million,” said Doug Borkowski, graduate assistant at the Financial Counseling Clinic. “The average student could save $1,200.”

Students’ paperwork must be processed by July 1 in order to consolidate at the existing 2.77 percent in-school rate. The Federal Direct Consolidation Loan is obtained when the government pays off loans from any of 23 different programs it offers. It does not pay off debt from private lenders.

“It takes 30 days for them to process it, so this should have been done a month ago,” Borkowski said. “If you’re going to be doing the paperwork next week, you’re going to be rolling the dice and playing the odds.”

E-mails sent out by the clinic estimated the new in-school rate to be 4.66 percent — a 68 percent increase from the current rate of 2.77 percent. The new rate is the largest single-year increase since 1981, according to the U.S. Treasury Department.

ISU students who graduated in May can also benefit from consolidation. The Utah Higher Education Assistance Authority program, obtainable by graduates who live outside Utah, offers the same interest rate as the one offered for in-school students.

Borkowski said information about loan consolidation has been sent to students via the Financial Counseling Clinic’s weekly e-mails since January. Applications for consolidation can be filled out over the phone or on the Department of Education Web site.

Even though rates are higher for other types of loans, demand continues to be high among students, said Aaron Clayberg, personal banker at U.S. Bank, 2546 Lincoln Way.

“With the low interest rate, we saw a big residential refinancing boom from two, three years ago,” he said.

“Students obviously aren’t doing that.”

Clayberg said the number of people taking out loans has not changed since that time period. He also said even though interest rates for private lenders are also likely to rise, students and other clients seem to be taking advantage.

“I wouldn’t say there’s a big rush of people coming to beat the increase in commercial interest rates,” Clayberg said.

Some ISU students say they are unsure about consolidating or acquiring loans.

Terry Endreshak, senior in psychology, said even though he has loans from eligible federal programs, he would not be consolidating.

“I have a Stafford and a Perkins loan, but I won’t be doing it,” Endreshak said.

He said he had looked at consolidating, but decided not to when he learned it was harder to get deferments on loan repayment when coming back for a second college degree.

Endreshak said consolidating would be an option before he receives his graduate degree.