But Tillman, who finished his graduate studies at the University of Missouri-Kansas City in January, and other recent graduates got a belated graduation present from the federal government last week. The interest rates on federally-subsidized student loans, which were at a high of 8.19 percent three years ago, have dipped to about 3 percent, the lowest ever. Some banking specialists doubt that the rates can go any lower.

The low rates will save student borrowers and graduates like Tillman who consolidate their old loans almost $400 on $10,000 of debt over the standard 10-year repayment period, according to the Education Department. On average, college students with loans graduate with $17,000 in debt to pay for their studies.

The new interest rate for federal Stafford loans is 2.82 percent for students still in school, down from 3.46 last year. For graduates and others already repaying their loans, the new rate is 3.42 percent, down from 4.06 percent last year. The rates are readjusted each year.

''Locking in these rates is a once-in-a-lifetime opportunity,'' said Barry Morrow, chief executive of Collegiate Funding Services, a company that helps borrowers consolidate their student loans.

John Dean, special counsel for the Consumer Bankers Association, said the new rates are a dramatic decrease from previous levels.

''Rates are so low now, I can't see them getting any lower, but I would have told you the same thing last year,'' he said.

Interest rates on the majority of federal student loans are calculated based on the 91-day Treasury bill, plus about 2 percent.

The new rates took effect on July 1 and will remain in place at least until June 30, 2004. They are applicable for loans taken out since July 1998.

The College Board recently reported that federal loans make up nearly half of the $74.4 billion in financial aid available to college students. The largest of federal loan programs are the need-based, subsidized Stafford loans.

Students are allowed to borrow as much as $23,000 in Stafford loans to pay for an undergraduate education and up to $65,500 combined for undergraduate and graduate studies. For independent students, the cumulative limit is $46,000.

The federal loan consolidation interest rates are low, too: 2.875 percent for a Stafford loan in grace and deferment periods, 3.5 percent for a Stafford loan in repayment. The federally-guaranteed loans are provided by private lenders, such as banks, credit unions, and savings and loan associations.

''A lot of people, mostly recent graduates, are coming to us to refinance,'' Morrow said. ''People could wait until later to refinance but doing it now would ease other debt and let them keep more of their money, cash relief.''

The lower interest rates on student loans could also mean fewer delinquencies and easier payments for borrowers.

Consolidating during the in-school or grace period -- usually the six months after graduation, when borrowers do not have to make payments -- will allow them to lock in the new lower interest rate for the life of their loan.

Tillman consolidated his loans earlier this year and will start paying the lower interest rate of 3.5 percent next month. Instead of $563 a month, his payments have dropped to less than $200.

But consolidation is not a good option for everyone.

''When you refinance, it will stretch out your payments, and you'll pay more interest if you pay over that full time,'' Morrow said. ''But there are no prepayment fines, so a person could pay more each month if they wanted to and shorten the time.''

Consolidating college loans is a major decision, and doing so with only a year or two left to finish repaying a loan may end up costing more, Dean said, because ''a 10-year loan can turn into a 20- or 30-year loan.''

Interest rates on consolidation loans are locked in for the life of the loan. Borrowers are not allowed to consolidate again unless they have new loans to add to the consolidation, which means more debt and more years paying it off.

''It could be a bad deal, because you could be at a time when you should be paying for your kids to go to college, but you're still paying for your own college education,'' Dean said.

Tillman, a 30-year-old resident of Kansas City, said he is postponing getting married and having a family for that reason.

''Paying off my loans is burden enough,'' he said.

Click Here: Graduate Stafford and Private Student Loans