While many students are enjoying sandy beaches and a break from the daily college grind, the judgement day for the fate of their future financial burden is fast approaching.
The Bush administration has recently proposed an interest rate hike on government loans for students -- the first in several years -- that was approved by Congress earlier this month
On July 1, interest rates on consolidation of student government loans currently offered by the government will increase by 1.93 percent over last year's rates.
This increase applies to variable-rate Stafford loans -- a popular low interest rate student loan.
In addition, interest rates for student loan consolidation will raise another 1.5 to 2.0 percent by July 1, 2006.
This will be the highest rate increase in several years, and it could amount to thousands of dollars for both undergraduate students, and, in some cases tens of thousands of dollars for graduate students who do not consolidate before the deadline.
Currently, students can use loan consolidation to combine all of their government loans which are at different interest rates into one fixed interest rate over a long term period.
The current rates are different depending on whether students decide to consolidate before or after graduation; however, the 1.93 percent hike applies to all rates.
According to the Associate Vice President of Finance, Frank Claus, the hike affects over 15,000 students at Penn who currently have not consolidated government loans.
However, students still have over 15 days to file an application to Student Financial Services which will accept them until June 30.
Penn's Student Financial Services has come up with one solution to the problem by offering to consolidate loans for students at the current lower interest rate.
SFS is currently working with American Education Services and the Pennsylvania Higher Education Administrative Association to both answer student question and provide financial options.
According to Claus, Penn has been on top of the problem from the beginning, " even though this is one of the busiest times for us," Claus said.
Postcards were sent to all students who currently receive government loans days after the initial news, and letters and emails have followed them in recent weeks.
However, if you are looking for more information on consolidation, your best bet may not be the phone lines at SFS.
"Penn has been inundated with telephone calls," Claus said, "it is a massive problem "
Claus, who says he does not make recommendations lightly, advises students to check the web site as soon as possible.
"My advice is to go to our Web site and then go from there to PHEAA, get as much information as you can, go to the online application process and apply," Claus said.
Undergraduate students may not have as much to worry about as Penn's upper level students, because of the relatively small amount of money they are allowed to borrow in government loans, but the opportunity is only there for another 15 days regardless of loan size.
College senior Roy Prather is not too worried about the interest rate hike.
He currently has government loans and is unsure of his plans to consolidate; however, he has been pleased with the notifications the school has offered.
Prather has read over the details carefully and believes that while it may be a burden for those with large loans, he is relying on the fluctuation of the economy.
"It will be an inconvenience for people now," Prather said, "especially since it could be years from now when [the interest rates] could be lowered."
