Terms to Know

One of the first steps to understanding the financial aid process is to learn the language you will hear and read. Here are a few key terms to know:

• Grant: Free money – yes, money that does not have to be paid back.

• Loan: Borrowed money - it has to be paid back over a period of time, usually after you've graduated.
  

• Interest: The amount of money you pay back in addition to the principal amount you borrow. Interest rates vary. Some loans may be subsidized. This type of student loan carries/accrues no interest charge while you are in school.
  

• Capitalization:  The practice of adding unpaid interest charges to the principal balance of an educational loan, which increases the size of the loan. Interest is then charged on the new balance, including both the unpaid principal and the accrued interest. Capitalizing the interest increases the monthly payment and the amount of money you will eventually have to repay. A Cost of Interest Capitalization calculator can assist in determining the cost of interest capitalization.
  You can access an interest calculator at www.Finaid.org 
  /calculator

• Need-based aid: Aid awarded to students on the basis of their financial need. This type of aid is re-evaluated each year by the FAFSA renewal process or as a student's financial situation changes.
  

• Dependent/Independent: According to the federal government, you must meet at least one of the criteria listed below to be considered Independent for the 2011-2012 academic year. (Your dependency status affects the amount of financial assistance available to you)
  
       • born before January 1, 1988
       • a veteran of the U.S. Armed Forces
       • enrolled in a graduate or a professional program
       • married
       • have legal dependents whose sole financial support you provide
       • an orphan or ward of the court until age 18 or under legal guardianship
       • an emancipated minor or an unaccompanied youth who was homeless

• Financial information:  Tax and assets information for you, the student, your spouse (if you are married or were married when you filed your tax return) and your parents, if you are dependent for financial aid
  
• Tax information: The federal tax returns you and your parents filed and all the W-2’s used to calculate the income reported on the 1040 forms. Federal tax returns include 1040, 1040A or a 1040EZ), and all the schedules filed for the prior year. 
  
• OPEID:  the number that identifies the school that recieves your FAFSA information and your EFC results.
  
• LSB's OPEID: 007779