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Indiana University
Financial Aid

Financial Aid 101

If you’re wondering how financial aid works or need a better understanding of the different terms used in financial aid conversations, you’ve come to the right place.

Everything starts with the FAFSA. What is it?

FAFSA stands for Free Application for Federal Student Aid. The FAFSA is a form used to determine if you’re eligible for federal loans, grants, and work-study, as well as some state financial aid and IU scholarships.

The FAFSA was developed by the U.S. government and includes financial questions for you and your parents (unless you are no longer classified as a dependent). It also asks about your citizenship status and marital status.

You can complete the FAFSA online for free in as little as 30 minutes.

Learn how to fill out the FAFSA

International students

If you are an international student, you do not need to fill out the FAFSA. Check with your IU campus’s international student services or Admissions office for more information on cost and financial aid.

Follow the steps in the financial aid process

  1. Fill out the FAFSA and apply for college.

    After you submit your FAFSA and submit your application to IU, the university will review your FAFSA to determine your eligibility for financial aid.

  2. IU will send you a financial aid notification after you’ve been admitted.

    This notification will include the federal loans, grants, and work-study you qualify for, as well as some state financial aid and IU scholarships.

  3. Work with an IU financial aid counselor to understand your options.

    A counselor in the financial aid office at your IU campus can help you assess the aid you qualify for, as well as opportunities to apply for private student loans and additional scholarships.

  4. Accept, reduce, or decline your loans.

    You may choose to reduce or decline an offered loan if it’s more than you need to cover your costs. An IU financial aid counselor can help you make your best decision.

  5. Manage your financial aid throughout college.

    You’ll need to fill out the FAFSA each year you want to receive financial aid, as well as keep an eye on your financial aid eligibility requirements.

  6. Prepare to pay your loans back.

    IU MoneySmarts can help you begin planning for managing your finances after graduation, including student loan payments.

Financial aid terms you need to know

As you begin learning about financial aid, you’ll probably encounter some words and terms you’ve never heard before. Don’t worry—we’re here to help.

Cost of attendance
All the direct and indirect costs of your education, including tuition and fees, housing and food, books and supplies, personal expenses, and transportation.
Dependent
You are considered a dependent student for financial aid purposes until you meet one of the independent student criteria on the FAFSA. Learn more about dependency status.
FAFSA
The Free Application for Federal Student Aid (FAFSA) is a form you need to complete before each year of college to determine your eligibility for federal loans, work-study, and grants, as well as some scholarships.
Federal student aid
Aid from the government in the form of grants, loans, and/or work-study. You’ll find out about federal student aid eligibility on your IU financial aid notification.
Federal work-study
Part-time jobs for undergraduate and graduate students with financial need. Work-study programs encourage community service work or work related to your chosen area of study.
Grant
A monetary gift for people pursuing higher education. Grants do not have to be repaid (unless you withdraw from school).
Loan
Student loans include federal loans (awarded by the federal government) and private loans (awarded by an external lender, such a bank, credit union, state agency, or school).

Federal loans are based on the FAFSA and are the most common type of federal aid available to students who demonstrate financial need. Government loans can be “subsidized” (where the interest is paid for you until six months after you graduate) or “unsubsidized” (where the interest begins accruing right away).

Private loans require separate applications, carry varying terms and conditions set by the lender, and are often more expensive than federal loans.
Pell Grant
The Pell Grant is the most common grant given by the federal government. The current maximum Pell Grant award is $7,395, for students who are attending school full-time and demonstrate financial need.
Merit-based scholarship
Money awarded to help pay for your education based on good grades, high test scores, athletic performance, or aptitude in a certain area (does not have to be repaid).
Need-based scholarship
Money awarded to help pay for your education based on financial need (does not have to be repaid).
State aid
Financial assistance for eligible in-state residents to help reduce educational costs.
Student Aid Index
The Student Aid Index (SAI) replaced Expected Family Contribution (EFC) beginning in 2024–25. SAI is used to determine how much financial aid you’re eligible to receive. The formula is: your estimated cost of attendance minus your SAI equals your financial need. The information you provide in your FAFSA form—including your parents’ available income, your income, and assets—is used to calculate your SAI. Your SAI is not the amount of money your family will have to pay for college.

Financial aid across IU

Find financial aid information and deadlines for each IU campus and IU Online.

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Get help from MoneySmarts

Learn how to budget for college and still afford a social life. Find out how to make the most of your financial aid and scholarships, and get tips on making good financial decisions now that could help you later.
Explore MoneySmarts

Questions? We’re here to help.

Have questions about scholarships, grants, or awards? The Admissions office at each IU campus will connect you with someone who can help.

Find out more about IU Admissions