Glossary of Financial Aid Terms



Adjusted Gross Income (AGI)
Appearing on your federal tax return, it is used to determine how much of your income is taxable, AGI consists of "gross income" from taxable sources such as wages and salaries, unemployment compensation, tips and gratuities, interest, and certain other types of income, minus your maximum allowable adjustments including alimony paid, penalties on early withdrawal of savings, payments to an IRA , payments to a Keogh retirement plan, and self-employed health insurance payments and moving expenses.

Asset
An asset is an item of value, such as a family's home, business, and farm equity, real estate, stocks, bonds, mutual funds, cash, certificates of deposit (CDs), bank accounts, trust funds, and other property and investments.

Award Letter
An award letter is an official document issued by the financial aid office that lists all of the financial aid awarded to the student. This letter provides the breakdown of your financial aid package according to amount, source, and type of aid. The award letter will include the terms and conditions for the financial aid and information about the cost of attendance.

Cosigner
A cosigner on a loan assumes responsibility for the loan if the borrower should fail to repay it.

Cost of Attendance
The cost of attendance is also known as the cost of education or budget, is the total amount it should cost the student to go to school. This amount includes tuition and fees, room and board, and allowances for books and supplies, transportation, and personal and incidental expenses. Loan fees, if applicable, may also be included in the COA. Childcare and expenses for disabilities may also be included at the discretion of the Financial Aid Administrator. MCC establishes different standard budget amounts for students off-campus, living with parents, and in-state and out-of-state students.

Custodial Parent
If a student's parents are divorced or separated, the custodial parent is the one with whom the student lived the most during the past 12 months. Much of a student's need analysis is based on financial information supplied by the custodial parent.

Default
Failure to make required debt payments on a timely basis or to comply with other conditions of an obligation or agreement.

Deferment
Deferment occurs when a borrower is allowed to postpone repaying the loan. If you have a subsidized loan, the federal government pays the interest charges during the deferment period. If you have an unsubsidized loan, you are responsible for the interest that accrues during the deferment period. You can still postpone paying the interest charges by capitalizing the interest, which increases the size of the loan. Most federal loan programs allow students to defer their loans while they are in school at least half-time. You can't get a deferment if your loan is in default.

Disbursement
Disbursement is the release of financial aid funds to your school account. The payment is made by semester.

Expected Family Contribution (EFC)
The Expected Family Contribution (EFC) is the amount of money that the family is expected to be able to contribute to the student's education, as determined by the Federal Methodology need analysis formula approved by Congress. The EFC includes the parent contribution and the student contribution, and depends on the student's dependency status, family size, number of family members in school, taxable and nontaxable income, and assets.

Federal Processor
The organization that processes the information submitted on the Free Application for Federal Student Aid (FAFSA) and uses it to compute eligibility for federal student aid.

Federal Work-Study
The Federal Work-Study (FWS) program provides students with part-time employment during the school year. The federal government pays a portion of the student's salary, making it cheaper for departments and businesses to hire the student. For this reason, work-study students often find it easier to get a part-time job. Eligibility for FWS is based on need. Money earned from a FWS job is paid directly to the student in a bi-weekly check and, therefore, does not apply to the students' billed charges. FWS wages are not counted as income for the subsequent year's need analysis process.

Financial Aid
Money provided to the student and the family to help them pay for the student's education. Major forms of financial aid include gift aid (grants and scholarships) and self-help aid (loans and work).

Financial Aid Package
The financial aid package is the complete collection of grants, scholarships, loans, and work-study employment from all sources (federal, state, institutional, and private) offered to a student to enable them to attend MCC.

Financial Need
Financial Need determines a student's eligibility for need-based financial aid, according to a federally-approved need-analysis formula. It is calculated by the difference between the Cost of Attendance (COA) at MCC and your Expected Family Contribution (EFC).

Free Application for Federal Student Aid (FAFSA)
The Free Application for Federal Student Aid (FAFSA) is used to apply for federal Pell Grants, Massachusetts state grants and all other need-based aid.

Grant
A grant is a type of financial aid based on financial need that the student does not have to repay.

Income Tax Paid
Appearing on your federal tax return, it the amount of money determined through the completion of your tax return that you must pay the IRS. It is different from the tax withheld amount indicated on your W-2 form.

Loan
A loan is a type of financial aid, which must be repaid with interest after you leave school or fall below half-time attendance (5 credits or less).

MassGrant
The MassGrant is need-based grant funding requiring full time attendance (12 credits or more) awarded by the Commonwealth of Massachusetts for state residents. It is available to families based on residency requirements, financial need, and by completing the FAFSA by the required filing date of May 1st each year.

Monthly Payment Plans
Middlesex Community College offers you the opportunity to spread your tuition payments, interest -free, over either 5 monthly payments, 4 monthly payments or 3 monthly payments. See the college Student Accounts Office web site at for details.

Packaging
Packaging is the process of assembling a financial aid package.

Parent Contribution
The Parent Contribution (PC) is an estimate of the portion of your educational expenses that the federal government believes your parents can afford. It is based on their income, the number of parents earning income, assets, family size, the number of family members currently attending a university, and other relevant factors. Students who qualify as independent are not expected to have a parent contribution.

Pell Grant
The Pell grant is a federal grant that provides funds of up to $5,645 based on the student's financial need. The grant award is prorated based on your enrollment as a full-time, 3/4 time 0r 1/2 time student.

Master Promissory Note (MPN)
The master promissory note is the binding legal document that must be signed by the primary borrower or student borrower before loan funds are disbursed by the lender. The promissory note states the terms and conditions of the loan, including repayment schedule, interest rate, deferment policy, and cancellations. The borrower should keep this document until the loan has been repaid. THe MPN can be completed and signed electronically using your federal PIN at trhe federal web site calledĀ studentloans.gov.

Satisfactory Academic Progress
A student must be making Satisfactory Academic Progress (SAP) in order to continue receiving federal aid. If a student fails to maintain an academic standing consistent with the school's SAP policy, they are unlikely to meet the school's graduation requirements. Students must meet a minimum grade point average, generally a 2.00, as well as meet a minimum credit completion rate of 66.6% (two thirds) of your attempted credits.

Stafford Loans
Stafford Loans are federal loans that come in two forms, subsidized and unsubsidized. Subsidized loans are based on need; unsubsidized loans aren't. The federal government pays the interest on the Subsidized Stafford Loan while the student is in school on at least a half-time basis. The Unsubsidized Stafford Loan may be used to pay the EFC. Undergraduates may borrow up to $23,000 ($3,500 during the freshman year, $4,500 during the sophomore year and beyond.

Student Aid Report
The Student Aid Report (SAR) summarizes the information included in the FAFSA and must be provided to your school's Financial Aid Office. The SAR will also indicate the amount of Pell Grant eligibility, if any, and the Expected Family Contribution (EFC). You should receive a copy of your SAR four to six weeks after you file your FAFSA using the paper FAFSA, four to seven days if you file the FAFSA electronically on the federal web site called www.fafsa.gov. Review your SAR and correct any errors on part two of the SAR. Keep a photocopy of the SAR for your records. To request a duplicate copy of your SAR, call 1-800-4FED-AID (1-800-433-3243).

Verification
Verification is a review process in which the Financial Aid Office (FAO) determines the accuracy of the information provided on the student's financial aid application. The federal processor selects applications for verification before your FAFSA is sent to the college. During the verification process the student and parent will be required to submit documentation for the amounts listed (or not listed) on the financial aid application. Such documentation may include federal tax return transcripts for you, your spouse (if any) and your parents, proof of citizenship, proof of registration with Selective Service, and W2, and 1099 forms, among other things. Financial aid applications are randomly selected by the federal processor for verification

W2 Form
Employers are required by the IRS to issue a W2 form for each employee before January 31. The W2 form lists the employee's wages and tax withheld. It does not indicate tax paid.

Last Modified: 2/28/14