Financial Aid Terms

1. Cost of Attendance. The cost for one academic year is often divided into two categories. When comparing the cost with other colleges, be sure you are comparing the same categories and the same items within each category.

Direct Costs will appear on your billing statement.

• Tuition  -  the cost of attending classes 
• Fees  -  the cost of other college services 
• Housing  -  the cost of living in a campus residence hall; often referred to as “room” or together with meals as “room and board.”
• Meal Plan -  the cost of eating on campus; often referred to as “board” or “board plan.”

Indirect Costs will not appear on your billing statement.

• the estimated transportation cost of getting to and from campus
• the estimated cost of books and supplies 
• the estimated cost of miscellaneous items, such as laundry, toiletries, trips into Chicago, pizza, etc.

2. Expected Family Contribution (EFC).  No longer used. See "Student Aid Index - SAI" below

3. Financial Need. When your EFC (see #2 above) is less than the cost of attendance (see #1 above) you have “financial need” and may qualify for “need-based financial aid” (grants, loans, work-study). Even if you do not have financial need, you may still qualify for scholarships and/or grants from the College, and unsubsidized student loans.

4. Grants.  A type of financial aid that does not need to be repaid, which is usually based on “financial need” (see #3 above). To qualify you must submit the FAFSA each year. Some grants have an early application deadline.

5. Loan. A type of financial aid that must be repaid with interest. There are both “subsidized” and “unsubsidized” Stafford Loans. The type of loan you are offered is determined by the College, based on your financial need. In addition to these federal student loans, there are non-federal student loans, and parents have the option to borrow a federal parent loan. You usually begin repaying loans after you graduate. Educational loans have varying interest rates and repayment terms. 

6. Student Aid Index (SAI). This is an “index number” that measure your family’s financial strength, and helps a school determine what you will receive in need-based financial aid (usually grants, loans, work-study). It will be between 0 and 999999 and is calculated using information that you and others provide on the “FAFSA” (Free Application for Federal Student Aid). A small or low SAI means that you need a significant amount of financial aid, and as the SAI increases, your “need” decreases.

 Your SAI is not: a dollar amount of aid you’ll receive, what your family is expected to provide, or your financial aid offer.

7. Scholarship.  A type of financial aid that is based on merit and does not need to be repaid. 

8. Verification. A process to confirm the accuracy of data you provided on the FAFSA. If selected for verification, you will be required to provide additional information to the school, including certain tax-related documents.

9. Work-Study.  A type of financial aid which involves working part-time while enrolled in college. The federal work-study program is based on financial need. Jobs are usually on campus. Funds earned are generally not applied to your bill, but are paid directly to you by check, so they can be used to pay indirect costs (see #1 above). While we will make every effort to place you in a job, placement is not guaranteed. If “work-study” is not shown on your award letter we may not be able to provide you the opportunity to work on campus.

More Terms, listed alphabetically …

529 Plan: a special way to save money for college which are given this name because they are authorized by Section 529 of the Internal Revenue Code. There are two types of 529 plans: pre-paid tuition plans and college savings plans. Also called “qualified tuition plans,” a 529 plan is usually offered by a state, state agency, or educational institution.

Accrued Interest: interest that accumulates on the unpaid balance of your loan.

Award Letter: the document prepared by the Office of Financial Aid after completing need analysis. The Award Letter lists the types and amounts of aid offered. If the Award Letter is “estimated” it will include a list of the document(s) needed to provide an official Award Letter.  

Board or Board Plan: meals offered on campus, usually in combination with campus housing (“room and board”).

Borrower: the person legally responsible for repaying a loan; has agreed to the terms and signed a promissory note.

Co-borrower or Co-signor: an adult who assumes secondary responsibility for loan repayment if the borrower does not make payment on the loan as required.

Custodial Parent: the parent(s) with whom the student lived the most during the 12 months prior to completing the financial aid application.  The custodial parent(s) - including step-parent,  if applicable - must provide financial information on applications.

Default: failure to repay a loan according to the terms of the promissory note; usually a loan which is at least six month overdue. Default is a severe form of delinquency.

Deferment: the postponement of loan payments allowed for a specific reason and a limited period of time. Conditions are established by the federal government

Delinquent or Delinquency: when a loan payment is not made on time, according to the terms of the loan. A loan can be delinquent by a few days or several months. After six months of delinquency, a loan is usually considered to be in default.

Dependent Student: most traditional college students fall into this category. Dependent students must report their custodial parents’ income and asset information on their financial aid applications.  According to the federal government, a student is dependent unless he or she meets at least one of the following criteria:

• will 24 years old by January 1 of the academic year
• is married
• is a graduate student
• is an orphan or was/will be a ward of the court to the age of 18
• has legal dependents other than a spouse, for whom s/he provides at least 51% of the financial support
• is a veteran of the U.S. armed forces

Disbursement: the release of financial aid funds to individual student accounts; funds are disbursed when the student’s financial aid file is complete and registration has been verified.

Entrance Interview: this is an informational counseling session required of all student loan borrowers, which must be completed before receiving the first loan disbursement.

Exit Interview: this is an informational counseling session required of all student loan borrowers, which must be completed before graduating from or leaving the College.

FAFSA (Free Application for Federal Student Aid): an application required from all students who wish to apply for need-based financial aid such as grants, loans and work-study. The FAFSA will calculate the “expected family contribution” (see below) using a federal formula.  

FAFSA Submission Summary: this document is provided to the student after the FAFSA has been processed. It contains all the information supplied on the FAFSA, and may be used to submit corrections. All colleges/universities listed on the Summary receive a complete report of the data as well.

Federal Aid: financial aid that is funded and regulated by the U.S. Department of Education. A FAFSA must be completed annually in order to determine eligibility for federal aid. The amount of federal financial aid is determined annually based on federal regulations, student eligibility and the availability of funds. 

Federal Pell Grant: a federal need-based grant, offered to the neediest undergraduate students. It does have to be repaid.  Students must reapply for each year. 

Federal Perkins Loan: a low-interest loan for undergraduate students, offered to the neediest students. Repayment usually begins nine months after graduation.

Federal Direct PLUS Loan (Parent Loan for Undergraduate Students): a  loan for parents of dependent undergraduate students which allows the parent to cover costs not paid by the financial aid offered to the student.

Federal SEOG (Supplemental Educational Opportunity Grant): a federal grant offered to undergraduate students who have exceptional financial need, usually to those who receive a Pell Grant. It does not have to be repaid.  Students must reapply for each year. 

Federal Direct Stafford Loan (subsidized): the most common student loan of all, this loan offered to students with financial need. Interest is not charged until after the borrower drops below half-time status.  Repayment of interest and principal begins six months after graduation or dropping below half-time, whichever comes first. 

Federal Direct Stafford Loan (unsubsidized): a federal loan which is available to students without financial need, and to those whose need has been met by other financial aid. Interest is charged to the student once the loan is disbursed, though the student has the option of postponing (deferring) payment as long as he/she is enrolled at least half-time. 

Federal Work Study: a need-based employment program which allows students to have a part-time job while going to school. At Lake Forest, work-study funds are paid to the student by check every two weeks.

Financial Aid: the term used to describe funds awarded to the student to help them pay for his or her education.  It may include scholarships, grants, loans or work-study.  Funds may come from federal government, a state, the College, or a private source. 

Financial Aid Award Letter: the document prepared by the Office of Financial Aid after completing need analysis. The Award Letter lists the types and amounts of aid offered. If the Award Letter is “estimated” it will include a list of the document(s) needed to provide an official Award Letter.  

Forbearance: an arrangement to postpone or reduce a loan payment for a specified time period. The borrower is charged interest during forbearance. Forbearance is usually granted at the discretion of the lender to borrowers ineligible for a deferment.

Free Application for Federal Student Aid (FAFSA): an application required from all students who wish to apply for need-based financial aid such as grants, loans and work-study.  

Full-time Student: at Lake Forest this is defined as a student enrolled in at least three course credits each semester.  Full-time students are charged the same amount for tuition, whether enrolled in three credits or 4.5 credits.

Grace Period: a period of time which begins after a borrower leaves college or drops below half-time study, and the time s/he must begin repaying their loans (including interest). The Perkins Loan has a nine month grace period; the Stafford Loan has a six months grace period.

Guaranty Agency: a private, non-profit, or state agency that has an agreement with the U.S. Department of Education (ED) to administer and act as an agent for FFELP loans for a state or region. It is available to answer borrower questions about their FFELP loans. ISAC (Illinois Student Assistance Commission) is the state agency in Illinois that serves this function.

Holder: an institution that owns the legal title to your loan. The holder may be the original lender, a secondary market, another lender who purchases your loan, or in the case of a defaulted loan, the guaranty agency or the federal government.

Income: for financial aid purposes, this will include both taxable and nontaxable income such as wages, interest/dividends, business/farm profits, social security benefits, child support, disability, inheritance, gambling winnings, retirement benefits, etc.

Independent Student: students who are not required to report their custodial parents’ income and asset information on their financial aid applications. According to the federal government, a student is independent if he or she meets at least one of the following criteria:

• will 24 years old by January 1 of the academic year
• is married
• is a graduate student
• is an orphan or was/will be a ward of the court to the age of 18
• has legal dependents other than a spouse, for whom s/he provides at least 51% of the financial support
• is a veteran of the U.S. armed forces

Interest Rate: the cost of borrowing money; may be fixed or variable (usually changing monthly or quarterly).

Lake Forest Grant: a need-based grant provided by the College and offered to students whose family is unable to pay the full cost of college. It does not need to be repaid. U.S. students must reapply for each year. 

Legal Dependent: for financial aid purposes, this is a child or other person (not a spouse) who lives with and receives more than half of his or her support from the student, and who will continue to receive that support from the student during the school year.

Legal Guardian: a court-appointed individual whose guardianship responsibilities include using personal financial resources to support the person in his or her charge. This person is not considered a parent when completing the FAFSA.

Lender: the financial institution (bank, credit union, etc.) which provides the funds for your student loan. It may also be the federal government or an educational institution.

MAP Grant: Monetary Award Program Grant. Funds provided to Illinois residents attending an Illinois college or university whose federal EFC is less than 9000.  Students must reapply for each year.  

Master Promissory Note (MPN): a binding, legal document that you must complete before receiving a federal student loan. By signing the single document (MPN) you are allowing the College to disburse your student loans for each of the years you are enrolled and eligible.

Meal Plan: meals offered on campus, usually in combination with campus housing (“room and board”).

Merit-based Aid: financial aid, usually in the form of scholarship funds, offered to a student based on academic ability, or talent in a given area (athletics, fine arts, subject areas, etc.). 

Need:  see “Financial Need” (#3 above).

Need Analysis: a step in the process of determining a student’s financial need by considering the information provided on the financial aid application(s).

Need-based Aid: financial aid, usually in the form of grant, loan or work-study, offered to a student when his/her family is unable to pay the full cost of school. The most common application to determine eligibility is the Free Application for Federal Student Aid (FAFSA). Undocumented students from Illinois complete the Alternative Application for Illinois Financial Aid, while undocumented students from other states and international students complete the CSS Profile.

Origination Fee: a fee charged by the federal government and deducted from the loan proceeds before disbursement to help reduce the cost of supporting low-interest loans; currently assessed on Federal PLUS and Stafford Loans, but not on the Federal Perkins Loan.

Parent Contribution: the amount a student is expected to contribute toward college costs, based on the information provided on the FAFSA. This is part of the “expected family contribution.”  The College may expect a parent to contribute more or less than the federal formula.

Part-time Student: at Lake Forest this is a student enrolled in fewer than three course credits each semester.  Part-time students are charged per course, and financial aid must be prorated accordingly.

Pell Grant: a federal need-based grant which is offered to the neediest students. It does have to be repaid. Students must reapply for each year. 

Promissory Note: similar to a “master promissory note” except that a new note must be signed each time a new loan is used.

Satisfactory Academic Progress (SAP): the measure of progressing toward completion of a degree from the College, based on both grade point average and the number of credits passed.

Secondary Market: an organization that purchases loans from lenders. Not all lenders sell loans, but it is a common practice. If your loan is sold, you will be notified and the secondary market will then become the holder of your loan. The secondary market may use a servicer.

Servicer: a company contracted by a lender to perform administrative tasks involved with loans, such as processing deferments and collecting payments. This is often the organization with which you will have the most contact once you leave college.

Stafford Loan:  the most common type of student loan to pay for college. There are two types:  “subsidized” and “unsubsidized.”  Additional information is found under “Federal Stafford” above and “Subsidized Federal Stafford” below.

Student Aid Report (SAR): the former term for what is now called the FAFSA Submission Summary (see above).

Student Contribution:  the amount a student is expected to contribute toward college costs, based on the information provided on the FAFSA. This is part of the “expected family contribution.” The College will expect a student to contribute at least $2000 toward college costs, even if the federal formula (EFC) does not expect anything at all.

Subsidized Federal Stafford Loan: the most common student loan of all, this loan offered to students with financial need. Interest is not charged until after the borrower drops below half-time status.  Repayment of interest and principal begins six months after graduation or dropping below half-time, whichever comes first.  See also Unsubsidized Federal Stafford Loan.

Unsubsidized Federal Stafford Loan: a federal loan which is available to students without need, and to those whose need has been met by other financial aid.  Interest is charged to the student once the loan is disbursed, though the student has the option of postponing (deferring) payment as long as he/she is enrolled at least half-time.  See also, Federal Stafford Loan, subsidized.

Work-Study: see "Federal Work-Study" above.