Hampshire College

Below are the features of the PLUS loan: (Note that the information listed below pertains to a PLUS loan borrowed through a private lender and a Direct PLUS loan borrowed through the federal government unless otherwise specified.)

• A parent may borrow a PLUS loan up to the cost of attending college less any financial aid received including other loans. There is no aggregate limit.
• A FAFSA form must be completed by the custodial parent(s) and the student for whom the parent is borrowing the loan. The PLUS loan is a federal loan, and the FAFSA determines if the student is eligible to receive PLUS loan funds.
• The PLUS loan is in one parent's name only. The student does not sign for the loan, and is not responsible for paying it back.
• The parent borrower must be a biological or adoptive parent, or the spouse of a parent (step-parent).
• The PLUS loan is canceled if the parent borrower or the student dies.
• The PLUS loan is canceled if the parent borrower becomes totally and permanently disabled.
• The PLUS loan has very liberal credit terms and has no debt-to-income ratio. The parent borrower does not need to be employed to be approved, and bankruptcy is not automatically a reason for denial.
• If the PLUS loan is denied, the student may borrow an unsubsidized Direct loan (up to $4,000 for first and second year students or up to $5,000 for third and fourth years). The parent or student must provide Hampshire's loan counselor the loan denial notice and the amount the student wants to borrow.
• The student must be a dependent of the parent borrower and must be under 24 years of age. Students 24 or older are not eligible to receive PLUS loan funds, but may borrow an unsubsidized Direct loan in the same amounts as listed above for a PLUS loan denial.
• PLUS loans borrowed on or after July 1, 2006, have a FIXED interest rate of 8.5 percent (8.50%). Direct PLUS loans have a FIXED interest rate of 7.9 percent (7.90%).
• PLUS loans disbursed PRIOR to July 1, 2006 have a variable interest rate of 3.28 percent (3.28%). This variable rate is effective July 1, 2009 through June 30, 2010. The variable interest rate changes annually on July 1. The variable rate will not exceed nine percent. The variable interest rate may be replaced with a FIXED interest rate through loan consolidation. 
• A three percent (3.00%) origination fee is charged on the amount borrowed and is deducted from the loan proceeds.
• Direct PLUS loans are charged an origination fee of four percent (4.00%). Direct PLUS loan borrowers receive an up-front rebate of one and a half percent (1.5%), which is added to the disbursement. This makes the net fee actually two and a half percent (2.50%). For example, on a $10,000 Direct PLUS loan, a $400 origination fee will be assessed and a $150 up-front rebate will be added, making the net fee $250 and the amount disbursed to the college $9,750.
• A default fee of up to one percent may be charged by the loan guarantor. This fee is deducted from the loan proceeds. Note that some lenders and guarantors are paying the default fee on behalf of the borrower. No default fee is charged on Direct PLUS loans.
• Loan proceeds are disbursed in two equal amounts, with one half disbursed for the fall term and the other half disbursed for the spring term. Be sure to apply for a loan for the full academic year. Avoid applying for two separate loans for the fall and spring terms. The proceeds are the net amount after the origination fee and default fee (if charged) are deducted.
• Payment on a PLUS loan begins within 60 days after the loan is fully disbursed.
• For loans borrowed on or after July 1, 2008, the parent borrower may defer monthly payments while the student is enrolled and for six months after the student ceases to be enrolled at least half time. The borrower must request this postponement option with their loan servicer. Interest is charged during this deferment period. Accrued interest can be paid monthly, quarterly, or capitalized (added to principal) quarterly.
• For loans borrowed prior to July 1, 2008, the parent borrower may defer monthly payments while the student is enrolled. Borrowers must apply for the forbearance each year through their loan servicer. Realize that interest is charged during a forbearance.
• Other payment postponement options are available if the borrower becomes unemployed or is experiencing an economic hardship.
• The repayment term is 10 years. If the borrower has borrowed $30,000 or more from the same lender, a 25-year repayment term is available. The $30,000 can be either all in one loan or the total aggregate, but must be with the same lender.
• Longer repayment terms are available if the PLUS loan is refinanced through loan consolidation. A consolidated PLUS loan has a repayment term of 10, 12, 15, 20, 25, or 30 years depending on the amount refinanced.
• PLUS loan borrowers may use the free service of the federal ombudsman to help resolve any disputes with the lender or servicer.
• Prepayment of a PLUS loan is allowed without a penalty.

In addition to the above features, many lenders and servicers have special borrower benefits and payment incentives that may decrease the interest rate, fees, or length of term. Please take some time to investigate these borrower benefits before choosing a PLUS loan lender.