ISU students concerned with rising tuition costs may feel some relief now that federal interest rates on student loans have lowered.

The new interest rates will affect Federal Stafford and Perkins loans issued to students and their parents.

“This is very good news for our recent graduates – we are recommending that they consolidate their loans now,” said Earl Dowling, director of financial aid.

The student financial aid office is working in conjunction with the Alumni Association to inform May and August graduates of the change in the interest rates, from 5.99 percent to 4.06 percent.

While the lowered interest rate will not have a noticeable effect on admission, administrators are pleased by the drop in interest rates.

“Anything that makes college more affordable is a plus,” said Marc Harding, director of admissions. “It’s a very, very positive thing for higher education.”

The new interest rate is the lowest rate in decades, and most students are being encouraged to consolidate their loans, even if they only borrowed once.

However, Dowling cautions students and recent graduates to read the fine print, since benefits can be lost through consolidation.

While lowered interest rate will not change the maximum amount students can currently borrow, the rates will make college cheaper in the long term.

“It probably lessens the blow of people trying to pay for school on loans,” said Roberta Johnson, associate director of financial aid.

The interest rates on student loans change every year based on the sales of 91-day treasury bills, but when students and graduates consolidate loans it provides a chance to lock in interest rates a student will pay for the lifetime of the loan, Dowling said.

The new interest rate will affect loans issued after July 1, 1998. Loans issued between July 1995 and June 30, 1998 can be consolidated at a rate of 4.26 percent, Johnson said.

With the rate set at 4.06 percent, $20,000 in loans repaid over 20 years will save a student or graduate $5,000 in interest fees.