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PLUS Loan features

PLUS Loan Features at a Glance

* Parents may borrow up to the cost of attending Hampshire less any financial aid received;
* FAFSA form must be completed by the student for whom the parent is borrowing the loan; the FAFSA determines if the student is eligible to receive the PLUS loan funds;
* FIXED RATE FOR 2006-2007: loans borrowed on or after July 1, 2006, will have a FIXED interest rate of 8.50%;
* VARIABLE RATE FOR 2006-2007: effective 7/01/06, the new variable rate for PLUS loans disbursed PRIOR to 07/01/06 is 7.94%; rate changes annually on July 1, unless loan is consolidated for a fixed interest rate; variable rate will not exceed 9.00%;
* 3% origination fee is charged of the amount borrowed and is deducted from the loan proceeds;
* up to 1% guarantee fee may be charged by guarantor;
* may defer monthly payments while student is enrolled; must apply for a forbearance every year through loan servicer;
* variable interest rate may be replaced with a FIXED interest rate through loan consolidation;
* 10 year repayment term; 25 year repayment term if loans total over $30,000 ($30,000 in either one loan or total of all PLUS loans with same lender);
* loan is in parent borrower's name only;
* loan is canceled if parent borrower or student dies;
* loan is canceled if parent borrower becomes permanently disabled;
* loan has very liberal credit terms and has no debt-to-income ratio;
* payment begins within 60 days after second disbursement is made to Hampshire;
* loan proceeds are usually disbursed in two equal amounts--one half for the fall term, one half for the spring term;
* prepayment is allowed without penalty;
* student must be dependent of parent borrower and must be under 24 years of age; students 24 or older are not eligible for a PLUS loan but may borrow an unsubsidized Direct loan in the same amounts as listed below for a PLUS loan denial;
* if PLUS loan is denied, student may borrow an unsubsidized Direct loan (up to $4000 for first and second year students; up to $5000 for third and fourth years); parent must provide Hampshire with denial notice.

In addition to the above features, many lenders and servicers have special borrower benefits which 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.



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