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Financial Aid
Glossary
Award Letter
A means of notifying aid recipients of the assistance being offered
by the postsecondary school. The award letter provides information
on the types and amounts of aid offered, as well as specific program
information, student responsibilities, and the conditions which
govern the award.
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Capitalization
The practice of adding unpaid interest charges to the principal,
thereby increasing the amount of the loan. As a result, you will
pay more interest over the life of the loan. Your monthly payment
amount may be higher or your repayment period could be longer.
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Cost of Attendance
Costs related to a student's enrollment
in a postsecondary school for a defined academic period. Cost
of Attendance components includes tuition and fees, room and board,
allowances for books and supplies, transportation, and miscellaneous
personal expenses. The Expected Family Contribution is subtracted
from the Cost of Attendance to determine the student's need for
aid.
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Deferment
A period of time during which a borrower's
repayment obligation is temporarily postponed for an authorized
reason. Borrowers whose interest was paid by the federal government
while in school will qualify for these same interest benefits
during deferment periods.
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Education Loan Management Resources (ELM)
The electronic loan system utilized by
the financial aid office to process student loans.
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Entrance Counseling
Before a school disburses a Federal Stafford
Loan (subsidized or unsubsidized), regulations require that a
student completes an entrance counseling session. The counseling
session provides information about how to manage student loans,
both during and after college.
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Exit Counseling
Before a student graduates (or drops below half-time attendance),
regulations require that an exit counseling session be completed.
The counseling session provides information about how to manage
student loans after college.
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Electronic Funds Transfer (EFT)
A process by which student loan proceeds
are electronically disbursed directly from the lender to the school
and the school then applies the funds against the student's account
at the school. This eliminates the need for individual checks
for student loan disbursements.
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Expected Family Contribution (EFC)
A calculated amount, based on a formula
established by Congress, of how much the student's family can
be expected to contribute toward the cost of the student's education
in an award year. The Expected Family Contribution is calculated
when the Central Processing System successfully processes a student's
FAFSA information and is the number schools use to determine the
amount and type of aid the student can receive.
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Federal Graduate PLUS Loan
A federal loan program through which graduate students
can borrow funds for their education. Graduate students may borrow
up to the cost of attendance minus financial aid. In order to
be eligible for Graduate PLUS funds, students must borrow their
full eligibility of Federal Stafford loans and submit the Graduate
PLUS Master Promissory Note, complete Graduate PLUS Entrance Counseling
and submit a Graduate PLUS Request form.
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Federal PLUS Loan
A federal loan program through which parents
can borrow funds for the education needs of their dependent children
enrolled at postsecondary institutions. Lenders such as banks,
credit unions, and loan associations make loans.
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Federal Subsidized Stafford Loan
A fixed, low interest rate loan based on
financial need. The federal government will pay the interest while
the student is in-school, during the grace period and authorized
deferment periods. The fixed interest rate is currently 6.8%.
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Federal Supplemental Educational Opportunity
Grant
This is a federal grant program that provides
assistance to undergraduate students who have not earned a bachelor
or first professional degree. Priority in awarding Federal Supplemental
Educational Opportunity Grant funds is given to students who have
exceptional financial need and are Federal Pell Grant recipients.
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Federal Unsubsidized Stafford Loan
A low fixed interest rate loan not based
on financial need. This loan is available for students who are
not eligible or only partially eligible for a subsidized Federal
Stafford loan or for independent students borrowing at the higher
loan limits. The student is responsible for paying the interest
from the date the loan is disbursed. Repayment of principal begins
six months after the student graduates or ceases to be enrolled
on at least a half-time basis. The fixed interest is currently
6.8%.
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Federal Work Study (FWS)
A federal employment program that provides
funding to participating schools to provide jobs to undergraduate
and graduate students, who have demonstrated financial need, to
help meet their education expenses.
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Financial Aid Package
The total financial aid awarded to a student
from a combination of two or more forms of financial aid (grants,
scholarships, employment, and/or loans).
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Free Application for Federal Student Aid
(FAFSA)
A student financial aid application completed
by students and parents to apply for federal student aid. The
information provided is the source for all Title IV needs analysis
computations, including the student's Expected Family Contribution.
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Gift Assistance
Student assistance funds in the form of
a scholarship, grant or tuition waiver. This type of financial
aid does not have to be repaid.
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Grants
Awards based on financial need or other
special requirements and do not need to be repaid when school
is completed.
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Illinois Student Assistance Commission
(ISAC)
State
agency that administers a variety of state student aid programs,
including the Illinois Monetary Award Program.
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Loans
A form of financial aid that must be repaid
with interest. Loans provide monetary assistance through participating
lenders, colleges, the federal government, and other organizations.
Loan funds are to be used for educational purposes and must be
repaid.
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Master Promissory Note (MPN)
Used for
Federal Stafford loans, a promissory note (see Promissory Note
definition) that can be used as both a single year and a multi-year
note. Borrowers can sign a MPN once, at the time they first borrow,
and then receive additional loans during the same year or in subsequent
years without signing an additional note.
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Merit Awards/Scholarships
This type of financial aid does not need
to be repaid. Merit awards are not based on financial need, but
instead on talent or academic achievements.
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Need
Analysis
The process of analyzing the student's
household and financial information on the student's FAFSA to
calculate an Expected Family Contribution (EFC) and eligibility
for financial aid.
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Need-Based
Financial Aid
Financial aid that is awarded solely on
the basis of the student and his/her family's financial need.
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Outside
Resources/Scholarships
A source of financial aid that was not
provided by the college or federal/state governments. Examples
include: Scholarships from private sources, employer reimbursement
programs and prepaid tuition plans. Students are required to notify
the financial aid office of an outside resource/scholarship. Receipt
of outside funds may necessitate (by federal and college regulations)
an adjustment to a student's financial aid package.
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Scholarships
Awards based on academic, merit-based,
athletic factors, or various other talents. Financial need is
generally not a factor in determining eligibility, and scholarships
do not usually have to be repaid.
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Self-Help
Financial aid in the form of a loan or
student employment.
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Student Aid Report (SAR)
The output document that the Central Processing
System sends to a student after the FAFSA is processed. It summarizes
the information the student submitted on the FAFSA; reports the
student's calculated Expected Family Contribution; provides comments
to the student as well as information for the financial aid administrator;
and reports the student's National Student Loan Data System financial
aid history.
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Verification
The process a school follows to check the
accuracy of the information reported by the student on the FAFSA.
The information reported is compared against documents, such as
a signed federal tax forms and signed Verification Worksheets,
the student provides to the school.
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Last updated
January 25, 2008 10:37 AM
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