What's New in Loans

Chess board and pieces

EFFECTIVE July 1, 2017: The fixed interest rate on subsidized AND unsubsidized loans made to undergraduate students on or after July 1, 2017 through June 30, 2018 is 4.45 percent (4.45%). The fixed interest rate on Parent PLUS loans made to parents of dependent undergraduate students on or after July 1, 2017 through June 30, 2018 is seven percent (7.00%).

EFFECTIVE July 1, 2016: The fixed interest rate on subsidized AND unsubsidized loans made to undergraduate students on or after July 1, 2016 through June 30, 2017 is 3.76 percent (3.76%). The fixed interest rate on Parent PLUS loans made to parents of dependent undergraduate students on or after July 1, 2016 through June 30, 2017 is 6.31 percent (6.31%).

EFFECTIVE October 1, 2015:  The loan origination fee for all Federal Direct student loans will be 1.068%, and for the Federal Direct PLUS loans, the origination fee will be 4.272%.  These apply to 2015-16 loans, which are first disbursed on or after October 1, 2015.

EFFECTIVE July 1, 2015: The fixed interest rate on subsidized AND unsubsidized loans made to undergraduate students on or after July 1, 2015 through June 30, 2016 is 4.29 percent (4.29%). The fixed interest rate on Parent PLUS loans made to parents of dependent undergraduate students on or after July 1, 2015 through June 30, 2016 is 6.84 percent (6.84%). 

EFFECTIVE March 29, 2015: Parent borrowers who are denied a Federal Parent PLUS loan but qualify for a PLUS loan through the appeal process or by obtaining an endorser for the loan must complete special loan counseling. The applicant will be notified how to satisfy this requirement by U.S. Department of Education.

EFFECTIVE October 1, 2014: The loan origination fee for all Federal Direct student loans will be 1.073%, and for the Federal Direct PLUS loans it will be 4.292%. These fees apply to 2014-2015 loans, which are first disbursed on or after October 1, 2014.

EFFECTIVE July 1, 2014: The fixed interest rate on subsidized AND unsubsidized loans made to undergraduate students on or after July 1, 2014 through June 30, 2015 is 4.66 percent (4.66%). The fixed interest rate on Parent PLUS loans made to parents of dependent undergraduate students on or after July 1, 2014 through June 30, 2015 is 7.21 percent (7.21%). 

EFFECTIVE December 1, 2013: The new loan fee for all Federal Direct student loans will be 1.072%, and for Federal Direct PLUS loans it will be 4.288%. These new fees apply to 2013-2014 loans, which are first disbursed on or after December 1, 2013.

EFFECTIVE July 1, 2013: The fixed interest rate on subsidized AND unsubsidized loans made to undergraduate students on or after July 1, 2013 through June 30, 2014 is 3.86 percent (3.86%). The fixed interest rate on Parent PLUS loans made to parents of dependent undergraduate students on or after July 1, 2013 through June 30, 2014 is 6.41 percent (6.41%).

EFFECTIVE July 1, 2013: First-time borrowers now have a limit on the maximum period of time that one can borrow Direct Subsidized Loans. In general, one may not borrow Direct Subsidized Loans for more than 150% of the published length of the academic program. This is called the "maximum eligibility period." If a school's period is four years, then a student may borrow subsidized loans up to six years. A two-year program would have a maximum period of three years. For more information, please click here.

EFFECTIVE July 1, 2012: The fixed interest rate on subsidized loans made to undergraduate students on or after July 1, 2012 through June 30, 2013 remains at 3.4 percent (3.40%).

EFFECTIVE July 1, 2012: The U.S. Department of Education can no longer offer borrowers repayment incentives. This means that the up-front rebate will not be available on loans borrowed on or after July 1, 2012. Borrowers will continue to be eligible for interest rate reductions when monthly payments are automatically electronically debited from their bank account.

EFFECTIVE July 1, 2012: Graduate and professional students are no longer eligible to receive subsidized loans. These students may continue to borrow unsubsidized loans.

EFFECTIVE July 1, 2012: Direct subsidized loans borrowed on or after July 1, 2012 and before July 1, 2014 will be charged interest during the six-month grace. The grace period is the time after a borrower leaves school or is enrolled less than half-time.

EFFECTIVE July 1, 2011: Interest rates on subsidized Direct student loans will be lowered to 3.4 percent (3.40%) for loans borrowed on or after July 1, 2011 through June 30, 2012. Unsubsidized Direct student loans will continue to be charged a 6.8 percent (6.80%) interest rate. These rates are FIXED and do not change.

EFFECTIVE July 1, 2011 through June 30, 2012: The new VARIABLE interest rates for federal education loans disbursed between July 1, 1998 and June 30, 2006 are as follows:

1.76% for Direct student loans during in-school, grace, and deferment periods
2.36% for Direct student loans during forbearance and repayment periods
3.16% for PLUS loans

EFFECTIVE July 1, 2010: The Federal Family Education Loan Program (FFELP) will no longer exist, and all federal student and parent loans will be made through the Direct Loan Program. This program is part of the U.S. Department of Education. Hampshire College has been participating in the Direct Loan Program since 1995.

EFFECTIVE July 1, 2010: Interest rates on subsidized Direct loans will be lowered to 4.5 percent (4.50%) for loans borrowed on or after July 1, 2010 through June 30, 2011. Unsubsidized loans will continue to be charged a 6.8 percent (6.80%) interest rate. These rates are FIXED and do not change.

EFFECTIVE July 1, 2010 through June 30, 2011: The new VARIABLE interest rates for federal education loans disbursed between July 1, 1998 and June 30, 2006, are as follows:

1.87% for Direct student loans during in-school, grace, and deferment periods
2.47% for Direct student loans during forbearance and repayment periods
3.27% for PLUS loans

EFFECTIVE February 14, 2010: Private loan applications will have more required disclosures and time before loan funds are disbursed. These provisions, part of Title X of the Higher Education Opportunity Act, provide more information for borrowers and co-signers to understand the terms of the loan, and allow for a three-day right of rescission if the borrowers wish to cancel the loan. Students must also complete a self-certification form that informs them that less expensive federal loan options may be available. These new requirements will prolong the application process; loan applicants should plan ahead when applying for a private loan.

The Current Credit Crunch and Education Loans: Despite some recent troubling reports in the media, we want to assure you that federal loans are available for all who want to and are eligible to borrow. Securing a private alternative loan may be difficult for a few students, especially those who plan to borrow without a co-signer or for those with only fair credit.

Hampshire College participates in the Federal Direct Loan Program for its federal student and parent loans. These loans are funded by the U.S. Department of Education.

If you are considering borrowing a private loan, be aware that some private loan companies have eliminated or suspended their lending or made the approval process more strict. If you previously borrowed a private loan and need to borrow another, be sure to borrow from the same lender. If your current lender is no longer lending private loans, you will need to select another lender for your new loan.

Because of the current credit crunch, borrowers with fair credit may have a harder time getting a private loan approved. If you need to borrow a private loan, be sure to borrow with a co-signer. Having a co-signer will help secure a loan approval and may lower your interest rate and any applicable fees.

If you have any concerns about the current credit situation and how it may affect your ability to borrow a loan, please contact our loan counselor

EFFECTIVE July 1, 2009: Interest rates on subsidized Direct loans will be lowered to 5.6 percent (5.60%) for loans borrowed on or after July 1, 2009 through June 30, 2010. Unsubsidized loans will continue to be charged a 6.8 percent (6.80%) interest rate. These rates are FIXED and do not change.

EFFECTIVE July 1, 2009 through June 30, 2010: The new VARIABLE interest rates for federal education loans disbursed PRIOR to July 1, 2006, are as follows:

1.88% for Direct student loans during in-school, grace, and deferment periods
2.48% for Direct student loans during forbearance and repayment periods
3.28% for PLUS loans

EFFECTIVE May 7, 2008: The Ensuring Continued Access to Student Loans Act of 2008 (H.R. 5715) will implement several substantial changes for Direct and PLUS loans. Student borrowers will be able to borrow an additional $2,000 in an unsubsidized Direct loan beginning with the 2008-2009 academic year. For PLUS loans, this act creates a six month grace period after the date the student ceases to be enrolled at least half-time. Payments will not be due until after the grace period if the borrower chooses. The act also eases the credit requirements for PLUS loans, making it easier to be approved.

EFFECTIVE October 1, 2007: The College Cost Reduction Act (H.R. 2669) has caused changes in the federal student loan consolidation process. This act has reduced the government's subsidy to consolidation loan lenders. This has required lenders to reduce or eliminate borrower benefits on their consolidation loans. Several lenders have left the consolidation business altogether because of the decreased profits. This change may affect students and parents looking to reduce their overall loan repayment costs.

The College Cost Reduction Act has also caused lenders to review and re-evaluate their PLUS loan borrower benefits, resulting in decreased benefits for borrowers.

The act also created the Loan Forgiveness for Public Service Employees Program. The new program provides for the cancellation of the remaining balance due on eligible federal Direct loans after the borrower has made 120 monthly payments on those loans under certain repayment plans while employed in certain public service fields. For more information and a list of eligible jobs, please visit the Direct Loan Servicing Center's website.

EFFECTIVE September 10, 2007: As required by the Higher Education Reconciliation Act of 2005 (HERA), the repayment plans for the Direct Loan Program will now be the same as the repayment plans that are available to borrowers in the Federal Family Education Loan (FFEL) Program. The Direct Loan Program will continue to offer an Income Contingent Repayment Plan, while the FFEL Program offers an Income-Sensitive Repayment Plan. For more information about the available repayment plans under the Direct Loan Program, visit their website.

EFFECTIVE July 1, 2006: The Higher Education Reconciliation Act of 2005 (HERA) significantly changed federal loan programs, including the Direct student loan and the PLUS loan:

Direct loans borrowed after July 1, 2006 will no longer have variable interest rates. Direct student loans disbursed on or after July 1, 2006 will have a FIXED interest rate of 6.80 percent (6.80%). The interest rates on subsidized loans will decrease slightly each year through June, 2012, when the rate will be 3.4 percent (3.40%). Unsubsidized Direct loans will continue to be charged 6.80 percent (6.80%).

PLUS loans borrowed after July 1, 2006 will no longer have variable interest rates. PLUS loans disbursed on or after July 1, 2006 will have a FIXED interest rate of 8.50 percent (8.50%). Be sure to review and compare the PLUS loan borrower benefits offered by lenders. These benefits may reduce your costs significantly.

If you currently have a variable interest rate on your Direct or PLUS loan, the rate will continue to be variable unless you choose to consolidate, or refinance, the loan for a fixed interest rate. If you keep the rate variable, the rate will change annually on July 1.

Guarantors are required to charge a one percent default fee effective July 1, 2006 on PLUS loans. This is in addition to the three percent loan fee currently charged on PLUS loans. Some lenders or guarantors are paying the fee on behalf of their borrowers. 

Direct loan borrowers may no longer consolidate their loans while enrolled in school. The in-school consolidation process has been eliminated.

EFFECTIVE June 15, 2006: The Single Holder Rule has been repealed for consolidation loans. This means that if you borrowed all of your federal educational loans from the same lender, you no longer are required to apply for a consolidation loan through that same lender. You are now able to shop around for the best consolidation benefits offered by lenders throughout the country. This is a good thing. Realize that many lenders will now be trying to attract borrowers who were once off-limits with more appealing borrower benefits. See the October 1, 2007 entry above to see how the College Cost Reduction Act may change things regarding shopping for the best consolidation loan.

 

Stay In Touch
With Hampshire's Loan Counselor
Snail Mail
Loan Counselor
Hampshire College
893 West Street
Amherst, MA 01002