Key Financial Aid Terms

Key terms related to Financial Aid | Key terms related to Student Loans
Other important terms from the Federal Student Guide

Financial Aid Process
It is important to learn the jargon of the financial aid process. Here are some key terms that relate to financial aid.

FAFSA or Free Application for Federal Student Aid

A federal financial aid form completed by the student and parents. It is used to determine how much a family is expected to contribute toward the cost of education. A federal formula is applied and the results are sent to you and the school you indicate. This form must be completed in order to receive most types of aid. The cost of education minus the family contribution equals a students financial need. The Eastern Illinois University Title IV Code that musts be included on the FAFSA is 001674.

Student Aid Report or SAR

The result of the FAFSA that has been processed by a federal processor and sent to the student.

Cost of Education

Also referred to as the Cost of Attendance. This is the total amount it will cost a student to go to school. It is usually expressed as a total for a nine month academic year. A separate cost is assessed for those attending summer school.

Family Contribution

Determined by a federal formula, the amount of money the parents and the student combined are expected to contribute to the cost of education during a school year. The federal government believes that the student and family are primarily responsible for financing the student's education. The Family Contribution might be made in the form of clothing money or miscellaneous expenses, weekend trips home, help with tuition payments, and other costs. It is possible to borrow an Unsubsidized Direct or PLUS Loan to assist in meeting this contribution.

Financial Aid Notification Letter

An offer to the student from the school's financial aid office. It contains various types of aid to pay for the cost of education.

Grant

A type of financial aid that does not have to be repaid.

Scholarship

A type of financial aid that most often does not have to be repaid. Funds are provided by a variety of state and civic organizations, professional groups, etc., and the colleges. Scholarships can be based on need, academic excellence, personal skills, family affiliations, athletic ability, etc.

Work-Study

This is a federal program which provides on-campus jobs for undergraduate and graduate students who need financial aid.

The following are important terms to be familiar with if you are planning on utilizing student loans to finance your education.

Promissory Note

A legal document that obligates the borrower to repay the loan

Notice of Loan Disclosure Statement

A document specifying the interest rate, when a check will be disbursed and mailed, how much the net proceeds of the check will be, and the amount of the origination fee deducted from the gross amount of the loan.

Disbursement

When the proceeds of the loan is applied to the students account.

Origination Fee

A fee charged by the U.S. Department of Education to offset the cost of the federal student loan program. The fee is usually deducted from the loan proceeds. Insurance or Guarantee Fee, "default insurance," is a fee charged for federally backed student loans. It usually is deducted from the loan proceeds.

Principal

This is the amount that is originally taken out as a student loan.

Interest

This is the fee charged for the use of borrowed money. It is computed as a percentage of the principal for a given period of time (5 years, 10 years,etc.).

Accrued Interest

Accrued interest accumulates along side the unpaid balance of the loan principal.

Capitalized Interest

Capitalized interest is accrued interest that is added to the principal, so interest is paid on the accrued interest.

Default

Default means failure to repay a student loan according to the promissory note. If you default on a student loan, before or after obtaining a degree, the federal government can take action to recover the money. Default may affect your credit rating, and you may not be able to receive additional federal aid if you return to school.

Please e-mail Financial Aid for further assistance.
East Wing, Student Services Bldg
(217) 581-3713 phone
(217) 581-6422 fax

Last updated: October 27, 2003

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