My DS8 still has this problem. Since the school taught cursive in 3rd grade, it was much better. I think it helped for him to keep his pencil to paper in cursive. It's still pretty bad, but every year it gets better.

Sorry, I have no good advice, except not making an overly huge deal out of it. My DS's teachers were really good about that, and as a consequence DS didn't get self-conscious about his writing.