Glossary of Financial Aid Terms
Do you know the difference between deferment and disbursement? Have you confused your COA with your EFC? Financial aid has a language all its own—complete with abbreviations and acronyms. To help families "talk the talk" this page features terms commonly used at Clark University.
Please note the glossary provides definitions for commonly used terms and is not an explanation of Clark University's financial aid policies.
Academic year: The period during which school is in session, usually from late August through mid-May, usually containing two semesters. A semester is roughly half of the academic year.
Accrued interest: The interest that accumulates on the unpaid balance of a loan.
Adjusted Gross Income (AGI): A measure of how much of your income is taxable, the AGI is the sum of wages and salaries, unemployment compensation, interest, tips and gratuities less adjustments to your income (including alimony paid, payments made to an IRA or Keogh retirement plan, moving expenses, penalties on early withdrawal of savings, and health insurance payments for self-employed individuals).
Alternative Loan: Any loan that is privately (not federally) funded.
Assets: Items of value which are included in the needs-analysis formula to calculate aid eligibility. Assets may include but are not limited to: farm or home equity, value of family-owned businesses, trust funds, savings and checking accounts, commercial or residential real estate or rental property, stocks, bonds, and other investments.
Award Acceptance Agreement: A form sent with award letters to first-time students. Before aid is finalized students must complete and return this form to the Office of Financial Assistance.
Award Letter: The offer of financial aid prepared by your financial aid counselor after a needs analysis evaluation. The award letter lists the types and amounts of aid offered and lists any items outstanding before a student's award is official and aid can be disbursed.
Borrower: The person who has signed and agreed to the terms of a loan and is responsible for repayment of the loan.
Business/Farm Supplement Form: Form detailing family-owned business or farm assets and liabilities to establish the value of business or farm.
College Board (CSS) PROFILE: An online application that first time aid applicants must complete to be reviewed for eligibility for Clark University's need-based aid.
Capitalization: Adding accumulated interest to the loan principal rather than having the borrower make interest payments. Capitalizing interest increases the principal amount of the loan and the total cost of the loan.
Clark Application for Financial Aid: The form required in place of the CSS PROFILE for returning students applying for a renewal of aid.
Co-borrower: Also called a cosigner, a co-borrower is someone who accepts responsibility for repayment of a loan if the primary borrower fails to make payments.
Cost of Attendance (COA): Also called a student's budget, the COA is an estimate of the actual cost of a year attending Clark; the COA includes both fixed expenses such as tuition, fees, room and board, and variable expenses such as transportation, books, supplies, and personal expenses. The combination of the expected family contribution and the total amount of aid received cannot exceed the cost of attendance.
Custodial Parent: If a student's parents are divorced, separated, or were never married, the custodial parent is the one with whom the student lived the most during the past 12 months.
Default: Failure to repay a loan according to the terms of the promissory note.
Deferment: The temporary postponement of loan payments for a limited period of time. Most student loans are deferred while a student is enrolled at least half-time; contact your lender for details.
Delinquency: Delinquency occurs when loan payments are late or missed, as specified in the terms of the promissory note and the selected repayment plan.
Dependent student: A dependent student meets any one of the criteria as defined by the federal government: not a graduate student, under 24 years of age; does not have legal dependents other than a spouse; is not an orphan or ward of the court (or was not a ward of the court until age 18); and is not a veteran. Dependent students must report their parents' income and assets on their financial aid applications.
Disbursement: The release of financial aid funds to a student's account; most funds are disbursed when the student's financial aid file is complete and registration has been verified. Most forms of aid are disbursed in two separate and equal installments: one for fall semester and another for spring semester. Disbursement may not occur earlier than 10 days before classes begin.
Discharge: The release of a borrower from the obligation to repay his or her loan.
Disclosure Statement: Statement of the actual cost of a loan, including the interest costs and the loan fee. Disclosure statements are usually sent to borrowers each semester as funds are disbursed.
Entrance interview: Online counseling session that borrowers must complete before receiving their first loan disbursement. Students are notified by the Office of Financial Assistance when to complete this process.
Expected Family Contribution (EFC): The amount a student's family is expected to contribute toward college costs. The EFC is derived from the financial information provided on the FAFSA and PROFILE forms, as well as the family's tax returns and includes an expected contribution from both the parent(s) and the student. Factors that contribute to the EFC include the student's dependency status, family size, number of family members in college, taxable and nontaxable income, and assets. The EFC is not a reflection of the bottom line bill.
Exit interview: Online counseling session that borrowers must complete before leaving college. Students are contacted by the Student Accounts Office to complete this process.
FAFSA: The Free Application for Federal Student Aid (FAFSA), required for all students who wish to apply for any form of financial assistance, including the PLUS loan. The FAFSA collects family financial information to determine whether students qualify for federal aid programs. FAFSA forms may be completed on paper and mailed to the federal processor or completed online at www.fafsa.ed.gov
Federal Aid: Any form of 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 Direct Graduate Student PLUS Loan: A federally sponsored, low-interest loan available to graduate and professional students. The PLUS Loan allows students to supplement his/her financial aid package by borrowing money to cover any costs not already covered by the student's aid.
Federal Methodology (FM): The needs analysis formula applied by the federal government to the FAFSA to determine a student's federal Expected Family Contribution (EFC). FM takes into account the family size, number of family members in college, assets, and taxable and nontaxable income.
Federal Direct Parent Loan for Undergraduate Students (PLUS): A federally sponsored, low-interest loan available to parents of dependent undergraduate students. The PLUS Loan allows a parent to supplement his/her student's financial aid package by borrowing money to cover any costs not already covered by the student's aid.
Federal Processor: The organization that processes the FAFSA, runs the FM calculations, and determines the federal EFC.
Federal Tax Return: Form filed with the Internal Revenue Service indicating income received and taxes paid for previous year.
Federal Work Study Program (FWSP): A federally-funded employment program that subsidizes wages for students with financial need to help them pay for educational expenses. Recipients work, usually on campus, for hourly wages and receive pay directly. Work-study wages are not deducted from tuition or the bill. Students who have not been awarded federal work-study may work on campus as well. Students who would like to work on campus but have not been awarded federal work-study funds may apply for on campus jobs. Jobs are posted through the jobs posting portal. The LEEP center can help you with your resume and cover letter.
Financial Aid Package: The complete collection of scholarships, grants, work study opportunity and loans offered to a student.
Forbearance: Granted at the discretion of the lender, forbearance is an arrangement to postpone or reduce a borrower's monthly payment amount for a limited and specified period or to extend the repayment period. The borrower is charged interest during forbearance. To inquire about forbearance, contact your lender.
Full-time student: A student taking a minimum of 3 Clark units per semester.
Gift Aid: Aid that the student does not have to repay.
Graduate Student: A student who has already earned a Bachelor's Degree and is working toward an advanced degree.
Grace period: The period between the time borrowers leave college or drop below half-time study and the time they must begin repaying their loans, usually six to nine months, depending on the type of loan.
Home Equity: The difference between the current market value of a home and the outstanding mortgage debt on the property. Home equity is considered in the calculation of institutional need-based aid.
Income: The amount of money received from any or all of the following: wages, salary, tips and gratuities, interest, dividends, capital gains, sales, or rental of property or services, business or farm profits, certain public assistance programs, disability, inheritance, gambling or contest winnings, pensions or retirement benefits and other types of taxable and nontaxable earnings.
Independent Student: For financial aid purposes, dependency status is determined by the federal government. To be considered an independent student a student must answer, "yes" to at least one of the following questions:
- Are you 24 years of age or older?
- Are you married?
- Are you a graduate or professional student?
- Do you have legal dependents other than a spouse?
- Are you a veteran or an individual currently serving on active duty in the US Armed Forces?
- At any time since you turned 13, were both your parents deceased, were you in foster care or were you a dependent or ward of the court?
- Are you or were you an emancipated minor as determined by a court in your state of legal residence?
- Are you or were you in legal guardianship as determined by a court in your state of legal residence?
- At any time on or after July 1, 2008, did your high school or school district homeless liaison determine that you were an unaccompanied youth who was homeless?
- At any time on or after July 1, 2008, did the director of an emergency shelter or transitional housing program funded by the US Department of Housing and Urban Development determine that you were an unaccompanied youth who was homeless?
- At any time on or after July 1, 2008, did the director of a runaway or homeless youth basic center or transitional living program funded by the US Department of Housing and Urban Development determine that you were an unaccompanied youth who was homeless or were self-supporting and at risk for being homeless?
Independent students report only their own income and assets (and those of a spouse) when applying for financial aid.
Institutional Aid: Any form of financial aid that is funded and regulated by Clark University. Institutional aid may be in the form of a merit-based award or a need based award. A FAFSA and PROFILE or Clark Application for Financial Aid must be completed annually in order to determine eligibility for need-based institutional aid. The amount of need-based institutional financial aid is determined annually based on Clark University policy, student eligibility, and the availability of funds.
Institutional Methodology (IM): The needs analysis formula applied by Clark University to the CSS PROFILE or Clark Application for Financial Aid to determine a student's institutional EFC. IM takes into account the family size, number of family members in college, assets including home equity, rental property, and value of a family-owned business, and taxable and nontaxable income.
Interest Rate: The expense of borrowing money that is calculated as a percentage of the amount borrowed. An interest rate can be fixed (meaning it stays the same for the life of the loan) or variable (meaning that the interest rate is tied to a stated index and changes quarterly or annually as the index changes).
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.
Loan: Money borrowed that must be repaid, usually with interest.
Loan Consolidation: The process of combining multiple student or parent loans into one new loan with a new repayment term, interest rate and monthly payment. In general, federal loans may be consolidated only with other federal loans (and not with private or alternative loans). For details about consolidation, contact your lender. Master Promissory Note (MPN): A binding, legal document outlining the terms and conditions of the loan.
Merit-Based Aid: Any aid that is based on a student's academic performance, test scores, community service, or other meritorious criteria as defined by the Admissions Office. Merit-based aid does not take into account a family's financial situation.
Monthly Payment Plan: Clark University participates in a monthly payment plan, administered by Tuition Management Systems (TMS). An alternative to large payments each semester, this plan allows families to make ten equal payments beginning June 1st. There is no interest charge for this service, only an enrollment fee.
Need: The difference between the Cost of Attendance (COA) and the Expected Family Contribution (EFC) that is used in determining the student's eligibility for need-based aid.
Need Analysis: The process of determining a student's financial need by analyzing the financial information provided by the student and his or her parents.
Need-Based Aid: Any aid that is awarded based upon a student's financial need as determined by the federal and institutional methodologies.
Non-Custodial Parent (NCP): If a student's parents are divorced, separated, or were never married, the non-custodial parent is the one with whom the student lived the least during the past 12 months.
NCP PROFILE: A need analysis form by the College Board completed online much like the CSS PROFILE. The NCP PROFILE determines the institutional contribution for the non-custodial parent and is required for all prospective students applying for Clark University need-based aid whose parents are divorced, separated, or were never married to one another.
Origination: The activities associated with processing a loan application.
Origination fee: A fee paid to the lender to defray the administrative costs associated with processing a loan.
Packaging: The process of assembling a financial aid package.
Parent Contribution (PC): Part of the expected family contribution, the parent contribution is an estimate of the portion of education expenses that is expected to be paid by the parent(s) and is based on the information supplied on the CSS PROFILE and FAFSA.
Private Scholarship: Also called an outside scholarship, a private scholarship is any award that comes from a source other than the University or federal or state governments.
Promissory Note: A legally binding contract between a lender and a borrower. The promissory note contains the terms and conditions of the loan, including how and when the loan must be repaid.
Resource: A financial incentive or reimbursement for attending school. Examples of resources are tuition remission, an employer's tuition benefit and veteran's benefits.
Repayment period: The period during which a borrower is obligated to make payments on his or her loan(s).
Repayment schedule: A statement provided by the lender to the borrower that lists the amount borrowed, the amount of monthly payments, and the date payments are due.
Satisfactory Academic Progress (SAP): The academic standard, as determined by Clark University, in compliance with federal regulations that a student must meet to continue receiving financial aid.
School of Professional Studies: formerly College of Professional and Continuing Education/COPACE.
Self-help Aid: Financial aid in the form of loans and work study.
Student Aid Report (SAR): A summary of the information provided on the FAFSA which is produced by the federal government and sent to the student.
State Grant: An award (usually need-based) funded by the student's home state.
Student Contribution (SC): Part of the expected family contribution, the student contribution is an estimate of the portion of education expenses that is expected to be paid by the student and is based on the information supplied on the CSS PROFILE and FAFSA.
Title IV School Code: This is a six-character identifier used by the federal processor to determine which schools should receive a student's FAFSA form. Clark's code is: 002139.
Undergraduate Student: A student who is working toward a Bachelor's Degree.
Unmet need: Any portion of the need not met by the financial aid award.
Verification: The process by which the Office of Financial Assistance confirms or corrects the information provided on the financial aid application forms. Verification requires families to utlize the IRS data Retrival tool via the FAFSA and send additional documentation including but not limited to: W-2 forms, copies of social security cards, copies of birth certificates, proof of selective service registration, and documentation of citizenship.
W-2 Forms: Also called a Wage & Tax Statement. The W-2 form reports an employee's wages and the taxes withheld; US employers are required to provide every employee a W-2 form at the end of the year.