Why does it feel like you need a degree just to understand what it’s going to cost you to get a degree? To help, here are some terms you should commit to memory:
Cost of Attendance (COA)
The actual cost of a single year of college—including tuition and fees, books and supplies, housing, food, transportation, and personal expenses—as calculated by a school’s financial aid office. This is the maximum amount your financial aid package (including all grants and loans) can cover.
Direct PLUS Loan
Your parents can apply for these loans to make up the difference between your COA and your financial aid package. But beware: They have high interest rates (7.08 percent as of July 2019), and the ’rents have to pass a credit check, which sometimes doesn’t go through until you show up at school...meaning that money you were counting on could...just...disappear!
Direct Subsidized Loan
These are government loans for undergrads who can prove their financial need. They have relatively low interest rates (4.53 percent in 2019) and the interest doesn’t start accruing until after you graduate. But bummer: You can only get up to $3,500 as a freshman.
Direct Unsubsidized Loan
Still low interest, but the interest starts accruing immediately (versus when you graduate). Meaning that after your six-month post-graduation grace period expires, you’ll be on the hook for more moola than you initially borrowed. The upside is you don’t have to prove your financial need and there are higher caps on what you can borrow.
Federal Supplemental Educational Opportunity Grant (FSEOG)
These grants, which range from $100 to $4,000 per year, are awarded by schools and financed largely (but not entirely) by the federal government. They’re for students with the greatest demonstrated financial need. Not every school awards them. But yeah, you def want these.
Federal Work-Study
This would be your illustrious job washing dishes in the cafeteria that’s gonna help you cover all those COA expenses. Work-study jobs are available only to students with demonstrated need—and since the government pays half your wages, you can’t make more than your designated “award.” (Also, be warned: Getting a “work-study” in your financial aid offer letter is no guarantee you’ll actually get a job. Cool-cool.)
Free Application for Student Aid (FAFSA)
Aka the paperwork you have to fill out—every damn year you’re in school—to get these monies. Answer invasive questions about your family’s financials and you’ll receive an estimated aid report, which the government and your school will use to determine how much paper to kick you! Politicians are currently trying to make this process easier. In the meantime, get started here.
Grants and Scholarships
Cha-ching! These free dollars will not contribute to your future debt. Grants tend to be based on financial need, while scholarships can also be based on merit. What matters is that you don’t have to pay them back. (Just talk to your financial aid office to make sure they won’t magically disappear after your freshman year.)
Interest
Interest is what you have to pay back in addition to what you actually borrowed. (Yep, this is how loans work and why so many people are still paying theirs off when they’re 40. Bc adulting!)
Pell Grant
These federal grants (say it again with us: free money) are awarded to students with exceptional demonstrated financial need. The maximum award in the 2019 to 2020 school year was $6,195. Hey, it’s not nothing!
Teacher Education Assistance for College and Higher Education (TEACH) Grant
These grants of up to $4,000 are available to undergrad and graduate students who plan to be teachers—and can commit to working in schools that serve low-income students for at least four years after graduation.
Source: U.S. Department of Education
