Private Alternative Loans | www.hampshire.edu
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Private Alternative Loans

Hampshire College recognizes that families may need to borrow to cover the cost of a student's education. We recommend that families first exhaust all other possible sources of funding before considering a private alternative education loan.

If you are considering borrowing a private loan, we suggest students first maximize their Direct loan eligibility and parents borrow a federal PLUS loan. If you need to apply for an alternative loan, please limit the student's borrowing to $5,000 or less per year.

Alternative, or private, loans are very different from the federally-backed Direct student loans or the federal parent PLUS loans. Alternative loans are private loans made between the student and a co-signer and the lender. The federal government is not involved in the private loan process. This means that the lenders may charge higher fees and interest rates. Repayment terms may be limited, and there is no subsidization of interest, as interest is always being charged on an alternative loan. 

Realize that lenders, loan servicers, loan guarantors, and loan holders may change their loan fees, benefits, terms, margins over the index, the interest index, and other loan-related criteria at any time.

Borrowers are free to select any loan from the current private loan lenders in the country.

If you are considering a private alternative loan, use the following steps to guide you through the process:

STEP 1: Be sure that you are maximizing your federal Direct student loan before considering a private loan. Federal student loans may be a better option for you with their fixed interest rates, future payment postponement possibilities, loan forgiveness options, and various repayment plans. Subsidized Direct loans are not charged interest while you are enrolled in school and during future deferments. For more information about Direct student loans, please click here.

STEP 2: Begin the loan process early. Give yourself enough time to research your private loan options. New private loan regulations are requiring lenders to provide more documentation and time to borrowers, which will delay the processing of loan applications. Plan to apply early to avoid last-minute borrowing. 

STEP 3: Become familiar with the various loan features. The more important features include the interest rate, whether the interest rate is fixed or variable, if variable, how often does it change and how is the change calculated,  payment postponement options, and if the loan has a co-signer release option. These features are discussed in detail in the Tips to Borrowing an Alternative Loan section. You may want to refer to this section several times during your loan decision process, as you want to make sure you are choosing the best loan, not just for this year but for the next 15 to 20 years when you will be repaying your loan.

STEP 4: Review various alternative loans to select the loan that best meets your current and future needs. Review each loan to learn its individual features. Pay special attention to the important features mentioned in STEP 3 above and determine the pros and cons for each loan. Refer back to the Tips to Borrowing an Alternative Loan section to help you decide which loan would work best for you. Use the loan comparison worksheet, found on the Tips to Borrowing page, to help you in your search.

STEP 5: Feel free to contact our loan counselor with any questions along the way. We do not recommend one loan over another, but if you need help to determine if you should borrow an alternative loan, how much to borrow, or if you want to discuss other financing options, please contact our loan counselor for assistance.

STEP 6: Once you have decided on which loan you want to borrow you are ready to apply. Follow the application instructions listed on each loan site. Some lenders are allowing electronic signatures on private loans. For those who do not, allow enough time for the required documents to be received and processed by the lender.

Good job! Your private loan application process is complete. We will be notified by the lender about your loan. We will need to certify that you are a student in good academic standing and approve the amount requested. The funds will be sent to us directly from the lender.

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Loan Counselor
Hampshire College
893 West Street
Amherst, MA 01002