Hampshire College

Take the time to review carefully your family’s financial situation and identify every financing resource available. Review and consider all available payment options, including the monthly payment plan. This will help limit what you actually need to borrow. 

Financing Tip: If you are planning to borrow a loan, you should also consider a monthly payment plan to reduce the amount you need to borrow. For example, if you are planning to borrow $20,000 but can afford a $5,000 monthly payment plan ($500 per month for 10 months) you then just need to borrow $15,000 instead of borrowing the full $20,000. The reduced loan amount will reduce your future interest charges and your future monthly loan payments. Also, in most cases, PLUS loan borrowers will not have any monthly loan payments until beginning in March, so why not make payments on a monthly payment plan before then to help reduce the amount you need to borrow?

Determine the total amount of education debt your family is willing to accumulate during the student’s college enrollment. Use online calculators to help determine future monthly payments.

Thoroughly review and decide how important the various features of a loan are before choosing one; features include fees, borrower benefits, payment incentives, and forbearance options. Review the Things to consider when choosing a PLUS loan section for assistance.

Guarantors are now required to charge a federal default fee, which was previously not charged by many. The default fee cannot be more than one percent of the amount of the PLUS loan. Some lenders and guarantors are paying the default fee in full or partially. When all other loan features are the same, select a PLUS loan where the default fee is being paid on your behalf to save you money.

Borrow for the entire year. Do not apply for only the fall term if the student plans to be here for the spring term as well. If the student will be attending only for the fall or spring term, then borrow for that one term. Try to avoid borrowing one semester at a time as this may cost you more in the long run because of the minimum monthly payments; you will also begin making monthly payments sooner. You will also need to apply again for the second term's loan.

Ask the lender questions when applying over the phone for a PLUS loan. Don’t feel uncomfortable asking what may seem to be simple questions. You are borrowing a loan that you will be paying back over a long period of time, so be sure to ask any questions you may have.

Consider consolidating, or refinancing, your PLUS loan after the loan is fully disbursed. Loan consolidation extends the repayment term which reduces your monthly payments. Keep this in mind for the future if you ever need to reduce your payments. Realize that your current borrower benefits are lost when you refinance your PLUS loans. Be sure to consider this before consolidating loans.

Be in touch with our loan counselor. Our loan counselor is knowledgeable about loan options and new trends in educational financing, and is a great resource for our families.