Students who qualify for a subsidized Direct loan are not charged interest while enrolled in college, during the six-month grace period, and during deferments. Students must demonstrate need for this loan by completing the Free Application for Federal Student Aid (FAFSA) and providing the financial aid office additional forms.

NOTE: For Direct subsidized student loans borrowed on or after July 1, 2012 and before July 1, 2014, the interest subsidy will not be available during the six-month grace period. This means that interest WILL be charged during the grace period for subsidized loans borrowed during this time period.

The unsubsidized version of the Direct loan is available to students who do not qualify for the subsidized Direct loan described above. Students apply for the unsubsidized Direct loan by completing the Free Application for Federal Student Aid (FAFSA) and providing the financial aid office signed copies of their parents’ and their own federal tax returns and W2 forms. This loan is available to all students regardless of need. Annual loan limits are the same, less any subsidized Direct loans received.

Interest is charged on an unsubsidized Direct loan from the time Hampshire receives the funds. Only payments on the principal are deferred until six months after the student ceases to be enrolled at least half-time. Students receive an interest-only bill every six months; students may pay all, some, or none of the accumulated interest. Any unpaid interest will be added to the amount borrowed (interest capitalization). This capitalization will result in higher monthly payments later. We recommend that students not capitalize the interest unless they are in their final year.

If a parent is denied a federal PLUS loan the student borrower becomes eligible for an additional federal loan in the form of an unsubsidized Direct loan. The additional unsubsidized loan is in the student’s name only. First- and second-year students may borrow up to an additional $4,000 for the year; others may borrow up to an additional $5,000 for the year.