Students and parents who borrowed to cover college costs better act fast or get ready to dig deeper: Graduates repaying federally backed education loans will be charged 7.14 percent beginning in July, a whopping 2 percentage point jump.

The annual increase, the second in as many years, was set by yesterday's U.S. Treasury auction.

It is one of several changes facing U.S. college students with loans. Changes Congress and President Bush approved this year on rules for students' Stafford loans and parents' PLUS loans included higher fixed interest rates for new borrowing.

Act by June 30 and the current rules apply, so the Class of 2006, other students still in school and parents can still consolidate loans and lock in interest rates as low as 4.75 percent during the post-graduate grace period, said Mark Brenner, vice chairman of College Loan Corp., a major student lender.

"This one is a no-brainer," Mr. Brenner said. "Procrastination is just not an option -- it's time to act now."

As of July 1, new Stafford student consolidation loans for students in school or post-graduate grace and deferment periods will carry a 6.54 percent interest rate and 7.14 percent interest once they are in repayment. PLUS loans will carry a 7.94 percent rate.

By College Loan Corp.'s reckoning, the typical student with a $20,500 Stafford loan can save $3,245 by consolidating before July 1.

Patricia Scherschel, vice president of loan consolidation for student lender Sallie Mae, says a one-day delay past June 30 in notifying a lender could cause a new grad in the grace period to pay almost 2 full percentage points more: It's the difference between a $129 monthly payment vs. $151 a month, which adds up to almost $5,000 over 20 years' repayment.

Changes in federal law coincide with a new survey in which 42 percent of recent college graduates who still carry student-loan debts report "living paycheck to paycheck."

"Funding a college education isn't just about four years; it's about a young adult's ability to start a family, buy a house and ultimately, to one day retire," Richard Davis of AllianceBernstein, the financial services firm that polled 1,508 grads ages 21 to 35.

The new federal law's other changes, effective July 1, include:

Stafford loans: Effective July 1, only borrowers who are out of school can lock in Stafford loan rates.

Before July 1, recent graduates who want to consolidate Stafford loans into a single loan can lock in their interest payments at the current 4.75 percent rate through June 30. Ms. Scherschel says you need to tell your lender you will consolidate by then; you needn't have all the paperwork completed.

Outstanding Stafford loans that are not consolidated will continue to carry variable interest rates that are adjusted each July 1, based on the last auction in May of three-month Treasury bills. Starting this July, the rate for Stafford loans during the grace period will go from 4.75 percent to 6.54 percent. For loans outside that post-graduate window, rates on existing Stafford loans will go from 5.3 percent to 7.14 percent.

PLUS loans: Parent Loans for Undergraduate Students -- PLUS loans -- let parents borrow to cover college costs not covered by other financial aid sources.

Rates on outstanding variable-rate PLUS loans, also adjusted yearly, will be 6.1 percent through June 30 and can be consolidated at 6.125 percent between now and then.

Outstanding PLUS loans that aren't consolidated by June 30 will carry a 7.94 percent rate for the 12 months starting July 1 and be adjusted every July 1 thereafter until the balance is paid off, based on the last May auction of three-month Treasuries. PLUS loans carry a 6.1 percent rate through June 30.

Parents needn't have more than one PLUS loan to consolidate but can consolidate a single PLUS loan, although lenders typically require a minimum balance before they allow consolidation. Sallie Mae's is $5,000.

Grad students: Effective July 1, graduate students will be able to take out fixed-rate PLUS loans at an 8.5 percent interest rate.

These loans may carry a more favorable interest rate for grad students than they'd get from a bank or other commercial lender, although parents with earnings histories and good credit ratings may get better rates from private lenders.

Student loan advisers agree it pays to shop around when looking to consolidate. Student lenders also are offering breaks on origination fees and other overhead to ease the cost of federal law changes, so it's smart to comparison-shop on this score, too.

It's worth noting, however, that Congress voted this year to eliminate the variable structure, so all new Stafford loans that are not used to consolidate existing loans but simply are taken out for college will come with a fixed 6.8 percent rate; such new PLUS loans will carry a fixed rate of 8.5 percent.

For most students, the new rates on existing loans and the vote by Congress on future loans mean that college will become even more expensive, said Joanna Acocella, executive vice president of government relations at College Loan Corp., a San Diego-based lender.

"There's a number of these provisions that students and their families really need to look at, because they will impact the cost of college for the average family," Ms. Acocella said.

The rates are adjusted annually based on the cost of three-month Treasury bills in the final auction of May. The rate increases are driven by Federal Reserve policymakers, who earlier this month raised the main U.S. interest rate to 5 percent, double its level 15 months earlier.

The rate increased last year for the first time since 2000-01, from a record low of 3.37 percent for 2004-05. The back-to-back increases are the largest since the current variable structure was introduced in 1998.