This is a partial list of frequently-used terms used in the financial aid process. When it is appropriate, you will find references to the way in which they are used at Lake Forest College.
Accrued Interest: interest that accumulates on the unpaid balance of your loan.
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.
Cost of Attendance: includes the total of tuition and fees, room and board (housing and food), books, personal expenses and travel. The financial aid you receive from all sources cannot exceed this total.
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.
Expected Family Contribution (EFC): the amount that you and your family could pay for one year of college costs, as determined by a federal formula.The figure calculated by this formula is usually not the same as the amount you will actually need to pay 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.
Family Contribution (EFC): an approximation of the amount you and your family could pay for one year of college costs, as determined by a federal formula.The figure calculated by this formula is usually not the same as the amount you will actually need to pay the College.
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 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 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 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.
FFEL or FFELP: Federal Family Education Loan Program; one of two programs administered by the federal government, by which Stafford and PLUS loans are made to borrowers. FFELP loan funds come from commercial banks, credit unions, and savings banks.
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 Announcement: the document prepared by the Office of Financial Aid after completing need analysis. The Announcement lists the types and amounts of aid offered. A link is provided to an Announcement Guide which identifies the terms and conditions of that aid. If the Announcement is “estimated” it will include a list of the document(s) needed to provide an official Announcement.
Financial Need: the difference between the “cost of attendance” and your “expected family contribution”; if the resulting number is greater than zero you may qualify for “need-based” financial aid; the higher the number, the more aid you may receive.
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.
Grant: a form of financial aid usually awarded based on “financial need.” It does not need to be repaid. Funds may come from the college, or federal or state governments.
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.
IIA Grant: Illinois Incentive for Access Grant. Funds provided to Illinois residents attending an Illinois college or university whose federal EFC is 0. Students must reapply for each year.
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.
LFAFA: the Lake Forest Application for Financial Aid; a form used to collect information not reported on the FAFSA, used to determine eligibility for financial aid. It is required from all returning students, and highly recommended from all new students.
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.
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: the difference between the “cost of attendance” and your “expected family contribution”; if the resulting number is greater than zero you may qualify for “need-based” financial aid; the higher the number, the more aid you may receive.
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 application to apply is the Free Application for Federal Student Aid (FAFSA).
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 and the Lake Forest Application for Financial Aid (LFAFA). 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.
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.
Scholarship: a form of financial aid which is awarded based on special talent or academic ability. It does not have to be repaid.
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): this document is provided to the student after submitting the Free Application for Federal Student Aid (FAFSA). The SAR contains all the information supplied on the FAFSA, and may be used to submit corrections. If a college is listed on the SAR, it receives a copy of the data as well.
Student Contribution: the amount a student is expected to contribute toward college costs, based on the information provided on the FAFSA and the Lake Forest Application for Financial Aid (LFAFA). 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: an employment program (usually need-based) 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.
