Financial Aid
Financial aid is money to help pay for college or career school. Financial aid can come from federal, state, school, and private sources to help you pay for college or career school and include grants, work-study, loans, and scholarships help make college or career school affordable.
Students must complete the Free Application for Federal Student Aid (FAFSA) to be considered for most sources of financial aid.
Financial Aid Vocabulary
Adjusted Gross Income (AGI): Your family’s wages, salaries, interest, dividends, etc., minus certain deductions from income as reported on a federal income tax return.
Award Amount: Amount of aid a school expects to pay a student based on the student’s current grant and loan eligibility, enrollment, Expected Family Contribution (EFC), and the school’s cost of attendance.
Award Letter: An offer from a college that states the type and amount of financial aid the school is willing to provide if you accept admission and register to take classes at the school.
Award Year: School year for which financial aid is used to fund a student’s education. Generally, this is the 12-month period that goes from July 1 – June 30.
Contributor: Each person whose financial information is required to complete the FAFSA is considered a contributor. The student is the main contributor; at least one parent must also be a contributor.
Cost of Attendance: The total amount it will cost you to go to a school – usually stated as a yearly figure. Includes tuition and fees, room and board, and allowances for books, supplies, transportation, loan fees and dependent care.
Dependency Status: The determination of a FAFSA applicant as dependent or independent.
Direct Data Exchange: The Direct Data Exchange allows the federal government to access each contributor’s IRS tax information. Each contributor must consent and approve to have federal tax information data transferred directly into the FAFSA.
Direct Loan: A federal student loan, made through the William D. Ford Federal Direct Loan Program, for which eligible students and parents borrow directly from the U.S. Dept. of Education at participating schools.
Direct PLUS Loan: A loan made by the U.S. Dept. of Education to graduate or professional students and parents of dependent undergraduate students for which the borrower is fully responsible for paying the interest, regardless of loan status.
Disbursement: Payment of federal student aid funds to the student by the school. Students generally receive their federal student funds in two or more disbursements.
Emancipated Minor: An individual (under the age of 18) who has legally been determined to be an adult by a court in his/her state of legal residence.
FAFSA: Free Application for Federal Student Aid.
FAFSA Submission Summary: A document that summarizes the information you reported on your FAFSA form. It includes your estimated eligibility for a Federal Pell Grant and federal student loans, your Student Aid Index (SAI), and whether you’ve been selected for verification.
Federal Pell Grant: A federal grant for undergraduate students with financial need.
Federal Perkins Loan: A federal student loan, made by the recipient’s school, for undergraduate and graduate students who demonstrate financial need.
Federal School Code: An identifier that the U.S. Dept. of Education assigns to each college school that participates in the federal student aid programs. In order to send your FAFSA information to a school, you must list the schools’ Federal School Code on your application.
Federal Student Aid: Financial aid from the federal government to help you pay for education expenses at an eligible college. Grants, loans and work-study are types of federal student aid. You must complete the FAFSA to apply for this aid.
Federal Student Loan: A loan funded by the federal government to help pay for your education. A federal student loan is borrowed money you must repay, with interest.
Federal Work-Study: A federal student aid program that provides part-time employment while you are enrolled in school, to help pay your education expenses.
Financial Need: The difference between the cost of attendance (COA) at a school and your Expected Family Contribution (EFC). While COA varies from school to school, your EFC does not change based on the school you attend.
FSA ID: A secure username and password used to create an account with Federal Student Aid and submit the FAFSA.
Grant: Financial aid, often based on financial need, that does not need to be repaid (unless, for example, you withdraw from school and owe a refund).
Homeless: An individual is considered homeless if he/she lacks fixed, regular and adequate housing.
Illinois Student Assistance Commission (ISAC): State nonprofit organization responsible for administering need-based gift aid programs to Illinois students.
Independent Student: A student who is one of the following: at least 24 years old; married; a graduate or professional student; a veteran; a member if the armed forces; an orphan; a ward of the court; someone with legal dependents, other than a spouse; an emancipated minor; someone who is homeless or at risk of becoming homeless.
Interest: A loan expense charged for the use of borrowed money. Interest is paid by a borrower to a lender. The expense is calculated as a percentage of the unpaid principal loan amount.
Legal Guardianship: A relationship created by court order, through which the court appoints an individual other than a minor’s parent to take care of the minor.
Merit-based Aid: Based on a student’s skill or ability. For example: a merit-based scholarship might be awarded based on a student’s grades and test scores.
Need-based Aid: Based on a student’s financial need. For example: a need-based grant might be awarded based on a student’s low income.
Net Price: An estimate of the actual cost that a student and his family need to pay in a given year to cover education expenses for the student to attend a particular school.
Net Price Calculator: A tool that allows a current and prospective students, families, and other consumers to estimate the net price of attending a particular school. Federal law requires every college to provide an online “Net Price Calculator” to help families of prospective first-time students estimate their individual net cost of attending a particular college. These NPCs can be found either on a college’s admission or financial aid webpage. The NPC takes into consideration both need and merit aid, so families will be asked to complete a brief questionnaire about their academic and financial histories in order to give a more focused, individualized estimate of total cost.
PLUS Loan: A loan available to graduate students and parents of dependent undergraduate students for which the borrower is fully responsible for paying the interest, regardless of the loan status.
Private Loan: A non-federal loan made by a lender such as a bank, credit union, state agency, or school.
Room & Board: An allowance for the cost of housing and food while attending college.
Scholarship: Money awarded to students based on academic, or other achievements, to help pay for education expenses.
Special Circumstances: Special circumstances are defined as “financial situations in which a financial aid administrator may determine that professional judgment is warranted.”
Student Aid Index: The Student Aid Index is calculated after submission of the FAFSA. Typically, it takes three to five days to receive the SAI. This index is what colleges use to determine your family’s financial strength and eligibility for aid. The SAI is not the dollar amount a family will be expected to pay.
Subsidized Loan: A loan based on financial need for which the federal government pays the interest that accrues while the borrower is in school, grace period, or deferment status.
Unsubsidized Loan: A loan for which the borrower is fully responsible for paying the interest, regardless of the loan status. Interest on unsubsidized loans accrues form the date of disbursement, and continues throughout the life of the loan.
Unusual Circumstances: The government defines unusual circumstances as “scenarios that prevent a student from supplying parent information and may result in a financial aid office overriding the student’s dependency status.” Whenever unusual or special circumstances severely impact the determination of financial aid eligibility, financial aid directors may exercise professional judgment to assist families. If family income has been severely compromised, please reach out to the financial aid director at your college to see if they can offer assistance.
Verficiation: The process of matching information on financial aid form with other documentation to determine accuracy of information supplied on financial aid form. Because of the DDX, there should be fewer families selected for verification. Verification is not an IRS tax audit!
©️2022 NCHS & NNHS College & Career Centers
Sue Biemeret, College Consultant, Member NACAC, IACAC, HECA
Jerry Cebrzynski, Associate Vice President for Financial Aid, Lake Forest College