Effective July 1, students and parents will no longer be able to use the Federal Consolidation Loan Program to shop around for better rates or terms offered by other lenders, and rates are going up from 4.7 percent to 6.8 percent for students and from 6.1 percent to 8.5 percent for parents.

In May 2005 the Department of Education ruled that students who are still in school could lock-in current low rates by consolidating their variable rate loans into a fixed-rate consolidation loan.

Millions of students never got the message, however, and Congress recently repealed the law allowing this, effective July 1.

The date for the repeal of the in-school consolidation law is July, but originally it was going to be the date the president signed the bill.

Every student currently attending college or graduate school not graduating by this June should immediately apply to consolidate every loan they have by requesting repayment status on their current loans (moves rate from 4.7 to 5.3 percent), requesting an in-school deferment (moves rate back to 4.7 percent), then consolidating the deferred loans at the lowest rate. Students with Direct Loans will not be required to take the extra steps described here, as the Direct Loan Program currently operates under a different set of rules.

Students, whose lenders do not understand the above process or refuse to cooperate, should immediately bring the issue to the attention of the financial aid director at their school.

Students who are not scheduled to graduate by June 2006 and who are not eligible to consolidate through the Direct Loan Program will lose their grace period, the six-month period where the government pays the interest on the subsidized portion of your loans after you leave school, by consolidating loans early.

This is a small price to pay, however, to lock-in the savings afforded by consolidating at 4.7%. Under current law, all students scheduled to graduate by June will be able to consolidate and retain their grace period benefit.

Students who have already consolidated will still be able to reconsolidate if they can find a lender that is willing to lower their rate.

But time is running out on that, too, because Congress also repealed the law that allows this.