If you are attending college, or planning on it, and haven't been paying attention to financial aid news, then you're in for a pricey shock: interest rates on federally subsidized loans are jumping over 40 percent as of July 1.

Almost two-thirds of all students attending a four-year college or university take on loans while they are in school, according to a September 2005 report by the Center for Economic and Policy Research. In 2003-2004, students graduating from public institutions had an average debt of $15,662, while those graduating from private institutions owed an average of $22,581.

Earlier this year, Congress cut billions of dollars in federal aid to college students and made plans to raise the interest rates on federally subsidized loans from 4.75 percent to 6.9 percent starting July 1, a change which could add several thousand dollars to a college graduate's debt.

But for many students, loan consolidation could help reduce the burden. David Smith of Mobilize.org is working to promote awareness on this issue through the Student Debt Campaign and in this Q & A, Smith explains what students can do about their loans.

CFK: What triggered the Student Debt Campaign?

David Smith: There's a couple of immediate things. One is earlier this year Congress cut over $12 billion in student aid and raised interest rate in loans in general. The new interest rate is a 44% increase, which is tagging on $7,000 in the life of the loan for the average college student. We want to educate people, so we're telling students to consolidate their loans. We're also sending a message to Congress: Prioritize education.

CFK: What are some of the problems college graduates with loans face?

David Smith: A lot graduates tell us they're not able to do service careers—community service, public sectors, non-profits because they're unable to make payments. They are forced to go into financial sector--jobs they feel that are not fulfilling. We're losing a lot of talent that is forced to go into the corporate sector.

CFK: Many graduating college seniors do not know what consolidation is and why they should consider consolidating their loans. Can you explain what consolidating your loans means?

David Smith: Many people pay college with a number of different loans: Perkins, Stafford, bank, school. When you graduate, when you have different types of loans, you make payments on all of them. You should consolidate at a fixed interest, so you know how much they're going to be now, in five years, and 10 years. You're only making one payment, and can budget accordingly. And you're bringing in a lower rate on the whole.

CFK: What has the response been to the campaign?

David Smith: We've seen an increase in awareness. Different non-profits are joining in our cause. We've encouraged elected officials who are giving speeches at schools for commencement to talk about the student debt issue. It's called a "Commencement of Debt." And they are telling the students, "You're going to have to pay back thousands of dollars." Senator Edward Kennedy and former Senator John Edwards have worked the issue into their speeches. We're trying to get more media to talk about it. The issue got buried when the budget was passed, but we're telling Congress, "You didn't deal with the issue by sweeping it into the rug."

CFK: What kinds of tangible results are you hoping to produce?

David Smith: We want this to be a central issue: making college affordable. We want to see an intentional focus that college is affordable. We want more money put towards grant programs. We'd like to see interest rates revisited.

Congress is not taking higher education seriously. We want to see them prioritize higher education. Ultimately, we like raise awareness through media.

CFK: Do you think college students are acting impulsively when they take on different loans?

David Smith: No, it's an absolute must. It's a must. Students have avoided college because they didn't want to take out loans and get in debt, especially low-income students who come from single-parent families. They'll say, "My family can't afford that." They don't want to take on loans that are almost the amount of what their parent(s) make. It keeps them away from college. I had to work 2 to 3 jobs and live 45 minutes from campus so I could afford to go to school and I received a decent amount of financial aid.

One of the largest external factors outside of tuition costs is cost of living; it has become a huge burden on these students.

CFK: The campaign is geared towards recent college graduates with loans to pay off, but what advice would you give to current college students who have loans?

David Smith: Understand the loans. They are not grants. You will have to pay them back. I've recommended taking the loans for college, however with the recent interest hike, you have to look at it as a value decision. What's your expected income at the end of it? You can convert some of your loan money into work-study. Apply for every scholarship you can. There's a lot of unclaimed scholarship money.

Martha Pitts is Connect for Kids' reporter/writer.