SOUTH PORTLAND (AP) – Warning that interest rates on student loans are poised to rise sharply on July 1, U.S. Rep. Tom Allen suggested Monday that students and parents consider consolidating their outstanding loans in order to lock in a lower rate.

Allen also announced that he was sponsoring legislation that would slash subsidized student loan interest for the neediest borrowers.

Speaking at Southern Maine Community College, Allen emphasized the need for students and parents to act quickly to avoid being hit with an additional $3,500 in interest charges on the average undergraduate loan.

“Education is the ticket to career success, economic prosperity and a rewarding life,” Allen said at a news conference. “But the price of that ticket is about to go through the roof.”

On July 1, he said, interest rates on outstanding federal student loans are expected to rise to just over 7 percent, the highest rate in six years, while rates on outstanding federal parent loans are expected to rise to about 7.8 percent.

He said students who consolidate their loans before the deadline may be able to lock in rates as low at 4.75 percent. Parents may be able to secure rates as low as 6.1 percent, he added.

Allen said his legislation would cut fixed-rate loan interest in half for the neediest borrowers: from 6.8 percent to 3.4 percent on student loans and from 8.5 percent to 4.25 percent on parent loans.

In a global economy, the nation’s prosperity will hinge on the availability of an educated work force, Allen said. He called for a national commitment to educational opportunity on the same scale as the benefits made available under the GI bill to veterans returning from World War II.

AP-ES-06-19-06 1659EDT