Paying for college glossary
Perkins loans: These have a fixed interest rate of 5 percent for a maximum of $4,000 for undergraduates and $6,000 for graduate and professional students. Payment is owed to the school that made the loan. Funds are limited and first come, first served.
PLUS loans: Parents of dependent undergraduate students and, starting in fall 2006, graduate students can borrow up to the entire cost of attendance, less other aid. Loans made before June 30 will vary with treasury rates. Congress set a higher fixed rate for all loans made after July 1, 2006.
Promissory note: Students must sign this binding legal document to get a loan. It lists the conditions for borrowing and the terms under which the loan is to be repaid.
Stafford loans: These are the most popular and common federally guaranteed student loans. Interest rates on loans made before June 30, 2006, will vary with treasury rates. But starting July 1, 2006, all new Staffords will charge 6.8 percent. For the 2006–07 academic year, most freshmen will be limited to $2,625. Sophomores won't be able to borrow more than $3,500, and upperclassmen are limited to $5,500. (Students can borrow more if they are independent of their parents or their parents have been turned down for a PLUS loan.) The loan money must first be applied to pay for tuition, fees, room, board, and other school charges. If money remains, the student will receive the funds by check or in cash. The maximum total debt from Stafford loans for a dependent undergraduate student is $23,000.
Student aid report: This shows a student's FAFSA entries and expected family contribution (EFC). It should be reviewed carefully to make sure that it is complete and accurate.
Subsidized loans: The U.S. Department of Education pays the interest on such loans while the borrower is in school and during grace and deferment periods.
Supplemental Educational Opportunity Grant (SEOG): Pell grant recipients receive priority for SEOG awards that range from $100 to $4,000 per year, with students with the lowest EFCs getting them first. Receiving other aid might reduce the amount. Each school receives a limited amount of SEOG funds. Not everyone who qualifies gets one, so applying early gives students the greatest likelihood of getting funds.
Unmet need: The difference between a college's total cost of attendance and the sum of the expected family contribution (EFC) and the aid award.
Unsubsidized loans: The interest on these loans accrues while the student is in school, but payments can be deferred until the student leaves school.
Work-study: These federally subsidized jobs are usually on campus but may also be at a private, nonprofit organization or public agency working in the public interest, or at a private, for-profit employer relevant to a student's course of study.
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