Both college graduates and students still in school may find some financial relief next month when the U.S. Dept. of Education lowers the interest rate on federal student loans.

On July 1, interest rates on federal student loans will be lowered from the current rate of 4.06 percent to 3.42 percent for college graduates who are paying off their Stafford Loans. The interest rate for students still in school will fall from 3.46 percent to 2.82 percent. The new rates are the lowest offered since the program was first started in 1965.

“Record-low loan interest rates may make the difference for many students considering whether to pursue post-secondary education,” U.S. Secretary of Education Rod Paige said in a press release.

The department also said earlier this month that it would field applications to consolidate loans through the William D. Ford Federal Direct Loan Program to allow borrowers to take advantage of the new rates.

In the1999-2000 school year, 60 percent of students who obtained a bachelor’s degree at a public four-year institution borrowed an average of $16,100 in federal loans, according to Sallie Mae Inc., a national lending source for educational loans.