With interest rates on student loans set to rise July 1, lenders are inundating people paying down college debt with a confusing array of aggressive pitches to refinance.

Under federal rules, borrowers who consolidate their student loans by the deadline can refinance to lock in current interest rates before they are slated to move much higher. But they face a welter of choices, including numerous incentives from institutions and private lending companies. The shrill tone of many lenders' marketing offers being made by mail and online is generating even greater confusion and stirring concern among university financial-aid officers that students may be lured into making poor refinancing decisions.

Many of the offers promise reduced interest rates if you routinely pay on time or make automatic payments. • College officials worry the offers are adding to the confusion surrounding loan refinancing. • Experts are encouraging students to refinance their loans in order to lock in lower rates, but caution them to weigh lenders' offers carefully.

One letter from Goal Financial LLC, a San Diego-based student-loan company, reads "Notice of Congressional Action" and then warns of a federal rate increase. Another one from student-loan provider Nelnet Inc., Lincoln, Neb., reads "FINAL NOTICE." A letter from Academic Loan Group, San Diego, warns about a new law affecting student borrowers. The letter begins: "URGENT NOTICE" and includes a check that is cashable if the student refinances with the company and begins repaying the loan on time.

"We're eager for kids to consolidate," says Nancy Coolidge , the University of California system's coordinator for student financial support, but "we've also cautioned people not to believe things that are in marketing materials." Ms. Coolidge says she's complained to the Education Department about marketing notices that include checks.

The Education Department resets the interest rate on both its major loan programs, the Stafford and PLUS programs, annually on July 1 using a formula based on the results of a late-May auction of the 91-day Treasury bill. Refinancing of federal student loans ahead of this deadline, which is usually done by students around the time they graduate, has become increasingly popular since the Federal Reserve began raising short-term interest rates in mid-2004. According to the Education Department, 2.5 million borrowers consolidated nearly $70 billion in student loans in the fiscal year ended Sept. 30, 2005, up from $44 billion the year before.

Rates on Stafford loans, which are available to students, are 5.3%. These are scheduled to rise nearly two percentage points to 7.14% on July 1. The rates actually charged can be 0.6 percentage point lower for students still in school or within six months of graduation. PLUS loans, which are available to parents of undergraduate students, carry a rate of 6.1%, which will increase to 7.94%.

After July 1, the student-loan consolidation business will lose much of its luster. Under legislation enacted earlier this year, interest rates will be fixed on Stafford and PLUS loans issued beginning in July, instead of resetting each year. New Stafford loans will carry a rate of 6.8%, and the rate on PLUS loans will be 8.5%. Only the rates on loans issued before July 1, 2006, that haven't been consolidated will continue to be reset annually.

Officials at many colleges and universities are encouraging students to refinance, in some cases even if they are still in school and may need to borrow more in subsequent years. "We went to our students twice this spring with newsletters, saying 'You really should do this,'" says Joe Paul Case , financial-aid director at Amherst College in Massachusetts. But, he says, only about a dozen to 20 students have taken advantage of the opportunity.

College officials say there is a lot of confusion surrounding loan refinancing, and that the marketing blitz by lenders is only making matters worse. "We have tripled our efforts to try to be sure students know how to do good comparisons" among competing refinancing offers, says Tally Hart , director of student financial aid at Ohio State University.

The companies aggressively marketing refinancing programs say they are seeking to make students aware of the short time to the deadline.

Most lender incentives, often called "borrower benefits," promise a reduction in the interest rate on the loan after the borrower makes a certain number of payments on time. A typical offering: a one-percentage-point interest rate reduction after 36 months of on-time payments, and an additional quarter-percentage-point reduction if you sign up for automatic payments. But the reduction is usually canceled if borrowers are late with even one payment. And even if the borrower makes it to the milestone to qualify, the benefit could still be rescinded if payments are late at any time down the road.

Whether that benefit is worthwhile can depend on the borrower's reliability. "Most students can't even make 12 months of on-time payments," says Mark Kantrowitz , a Pittsburgh-based financial-aid specialist.

Students also should carefully read the marketing materials. Nonprofit lender Access Group Inc., Wilmington, Del., says on its Web site that its one-percentage-point reduction will remain in effect "as long as you continue to make scheduled payments on time," adding that "there is no 'second chance' on this loan so borrowers will not be able to regain incentive if lost."

Nelnet, on the other hand, says students get to keep the rate reduction as long as they make it to the first 36 payments, even if they are late subsequently. As an alternative, Nelnet offers a 3.33% reduction on the loan's principal after 30 on-time payments. Tim Bornemeier , a Nelnet official, says that the latter benefit allows consumers to cut a chunk out of their loan balance sooner, though the interest-rate reduction option is likely better for the long term.

Other companies offer discounts that may be smaller in size, but are more accessible. NorthStar Education Finance Inc., St. Paul, Minn., offers a month-by-month credit that can amount to an annual rate reduction of three-fourths of a percentage point. Students lose the credit only if they fall 60 days past due on a payment. Once the borrower is caught up again on payments, the benefit resumes.