Financial Aid Glossary

On Dec. 27, 2020, Congress passed the Consolidated Appropriations Act. The law contains the FAFSA Simplification Act – a redesign of the processes and systems used to award federal student aid. One such change is replacing the Expected Family Contribution (EFC) with the Student Aid Index (SAI), which will start to be implemented for the 2024–25 award year. The SAI is an evaluation of the financial resources that may be available to contribute toward a student's education expenses. For more information visit:


Academic YearThe period of time in which school is in session -- typically Fall through Spring semesters.

Accrual Date - The date on which interest charges on an educational loan begin to accrue.

Adjusted Available Income - The remaining income after taxes and a basic living allowance have been subtracted (in the Federal Methodology).

Assets - Cash in checking and savings accounts, trusts, stocks, bonds, other securities, real estate (excluding home), income-producing property, business equipment, and business inventory. Considered in determining expected family contribution (EFC/SAI).

Asset Protection Allowance - The portion of parents' assets that are not included in the calculation of the parent contribution (calculated by Federal Methodology formula).

Associate Degree - A two-year college degree.

Award Letter - Official letter from the college financial aid office that lists all the financial aid awarded to the student.

Bachelor's Degree - A four-year college degree.

Budget - The estimated cost of attendance for a student at an institution: typically includes tuition, fees, books, supplies, room, board, dependent care, personal expenses and transportation.

Campus-Based Programs - U.S. Department of Education federal student aid programs administered by colleges and universities. Includes: Federal Perkins Loan, Federal Supplemental Educational Opportunity Grant (FSEOG) and Federal Work-Study (FWS).

Central Processing System (CPS) - The computer system that receives the student's need analysis data. The Central Processing System performs database matches and calculates the official Expected Family Contribution (EFC/SAI) and sends out the Student Aid Report (SAR).

Commuter Student - A student who lives at home and travels to school.

Consolidation Loan - Loan that allows borrowers to lower their monthly payments by replacing their original loans with one loan. Consolidation loans typically have longer repayment periods and greater interest.

Cooperative Education (Co-Op) - Many college programs offer paid opportunities to gain professional, full-time work experience while enrolled in college.

Cost of Attendance - Also known as the student budget, it is the total amount of money it will cost a student to go to school. The COA is composed of tuition and fees, books, course materials, supplies, equipment, transportation, food, housing, and miscellaneous expenses.

Custodial Parent - In cases where a student's parents are divorced or separated, the custodial parent is the parent with whom the student lived the most during the past 12 months.

Default - Failure to repay or otherwise meet the terms and conditions of a loan. Default typically occurs after six months of delinquent payments. Penalties include a bad credit rating, loss of future financial aid eligibility, withholding of tax refunds, garnishing wages and loss of monthly payment option.

Deferment of Loan - Period during which the repayment of the loan is suspended because the borrower meets certain eligibility requirements (e.g., enrolled in college at least half-time).

Delinquency - Failure to make a scheduled loan payment.

Dependency Status - A student's dependency status determines the degree to which the student has access to parent financial resources. An independent student is at least 24 years old as of January 1, is married, is a graduate or professional student, has a legal dependent other than a spouse, is a U.S. Armed Forces veteran, is/was an orphan or ward of the court or previously in foster care after the age of 13, or is currently serving on active duty in the U.S. Armed Forces for purposes other than training.

Disbursement - The process by which financial aid funds are made available to students for use in meeting educational and related living expenses. Funds may be disbursed directly to the student, or applied to the student's account.

Eligible Noncitizen - In order to receive federal financial aid, you must be a U.S. Citizen, U.S. national, or a U.S. permanent resident who has an I-151, I-551, or I-551C (Alien Registration Receipt Card) If you are not one of these, you must have an Arrival-Departure Record (I-94) from the Department of Homeland Security (DHS). Check with the financial aid office for acceptable documentation.

Enrollment Status - Indication of whether student attends full or part-time. Typically students must be enrolled at least halftime (and in some cases full-time) to qualify for financial aid.

Expected Family Contribution (EFC) - Will be replaced by the Student Aid Index (SAI) starting in the 2024-2025 FAFSA. Students and families will see a different measure of their ability to pay for college, and they’ll experience a change in the methodology used to determine aid. SAI is based on family earnings, assets, and family size.

Federal Direct Loan - Federally guaranteed, low-interest rate for students. There are two types of Federal Direct loans: subsidized (need-based) and unsubsidized (non need-based). Both types allow deferment of payments until a student leaves school.

Federal Direct Subsidized Loan - A loan that student borrowers do not have to pay interest on until after their grace period or deferment expires.

Federal Direct Unsubsidized Loan - A loan that students borrow and must pay all the interest on, including while they are enrolled in school, and during periods of grace and deferment.

Federal Methodology - The need analysis formula used to determine a family's expected family contribution. The Federal Methodology considers family size and taxable and nontaxable income and assets.

Federal Processor - The Federal Processor is 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 Supplemental Educational Opportunity Grant (FSEOG) - Federal Government grants for students with exceptional financial need (as determined by the college).

Federal Work Study - Federally sponsored Work Study (FWS) Program provides undergraduate and graduate students with school-year part-time employment. The Federal Government pays some of the student's salary, which helps departments and businesses pay for and ultimately hire students. Eligibility is based on financial need.

Financial Aid Administrator - College employee responsible for preparing and communicating information about student loans, grants, scholarships and employment programs, and for advising, awarding, reporting, counseling and supervising student financial aid office functions.

Financial Aid Package - The total amount of financial aid assistance (federal and nonfederal) a student receives, including grants, scholarships, loans, and federal work-study. Unsubsidized Stafford loans and PLUS loans are not considered part of the package.

Financial Need - The difference between the student's cost of attendance and the Expected Family Contribution.

Fixed Interest Loans - Interest rate stays the same for the life of the loan.

Forbearance - The approved temporary suspension of loan payments due to a financial hardship (interest continues to accrue).

Free Application for Federal Student Aid (FAFSA) - The application students must first complete to apply for virtually all forms of financial aid. Available at high schools and colleges or by calling 1-800-4-FEDAID, and online at Free Application for Federal Student Aid.

Gift Aid - Grants and scholarships that do not need to be repaid.

Grace Period - The period after a student either graduates or leaves school and before loan payments must begin (usually six months).

Grant - Financial aid that does not have to be paid back — typically based on financial need.

Guarantee Fee - A percentage of the loan that is paid to the guarantor to insure the loan against default. The fee is usually 1 percent of the loan amount and is usually deducted from the dollar amount of the loan.

Income Contingent Repayment - The size of the monthly payments depends on the income earned by the borrower. As the borrower's income increases, so do payments.

Interest - The fee charged to borrow money, usually a percent of the outstanding loan amount, which accrues and is paid over the life of the loan.

Loan - A sum of money borrowed usually for education purposes. The entity lending the money usually charges interest for use of the money. The amount borrowed does have to be paid back, usually with interest, over a period of time.

Monthly Payment - The amount that you must pay each month on your loan during repayment.

Need Analysis - The process used by a college to evaluate an applicant's financial resources and determine how much the student or family can pay toward the cost of the education.

Origination Fee - A fee charged by the government that is automatically deducted to offset the cost of processing the loan.

Packaging - A financial aid administrator's attempt at combining various types of student aid (grants, loans, scholarship and employment) to attempt to meet a student's financial need.

Parents' Contribution - A quantitative estimate (calculated by the federal government) of the parents' ability to contribute to postsecondary educational expenses.

Payment Schedule - A summary of the terms of the loan that includes the total principal amount, the date payment begins and the interest rate.

Pell Grant - Federal grant program for undergraduate students who demonstrate financial need and have not yet completed a baccalaureate degree.

Principal - The amount borrowed or owed on a loan.

Professional Judgment - For need-based federal aid programs, financial aid administrators can adjust the expected family contribution (EFC/SAI), or the cost of attendance (COA), or change the dependency status (with documentation) when extenuating circumstances exist (for example, if a parent becomes unemployed, disabled or deceased).

Promissory Note - A legally binding contract/document a student signs before receiving loan funds that lists the terms and conditions of the loan and obligates the borrower to repay.

Satisfactory Academic Progress - A school's policy concerning the minimum number of courses that must be completed each semester, the maximum time frame, and the minimum GPA required to receive financial aid.

Scholarship - A form of financial assistance that does not have to be repaid. Scholarship are usually offered to students who show potential for distinction, or who possess certain characteristics important to the scholarship provider (such as scholastic achievement, religious beliefs, hobbies, ethnicity, majors, etc.). These are available from many sources including community groups, schools and private organizations.

Simplified Needs Test - An alternate method of calculating the expected family contribution for families with adjusted gross incomes less than $50,000, who have filed or are eligible to file an IRS Form 1040A or 1040 EZ or who are not required to file an income tax return.

Stafford Loan - Loans awarded on the basis of financial need. Students may apply for a subsidized, an unsubsidized, or a combination of both. These loans are made directly from the government under the Direct Lending Program.

State Student Incentive Grants - States receive matching funds from the federal government to help fund this program for state residents.

Student Aid Report (SAR) - The official notification sent to students after submitting the FAFSA. Students may be required to submit this document to the college's financial aid office.

Student Contribution - A quantitative estimate of the student's ability to contribute to postsecondary education expenses.

Supplemental Education Opportunity Grant (SEOG) - Federal grant program for undergraduate students with exceptional need. SEOG grants up to $4,000 are awarded by the school's financial aid office.

Title IV Programs - Federal student aid programs authorized under Title IV of the Higher Education Act of 1965, as amended. Includes Federal Pell Grants, Federal Supplemental Educational Opportunity Grant, Federal Work Study, Federal Perkins Loan, Direct Loan, Direct PLUS Loan and SSIG.

Undergraduate Student - A student who has not yet received a bachelor's degree.

Unmet Need - Difference between a student's total cost of attendance at a specific institution and the student's total available resources, including financial aid.

Variable Interest - Interest rates that are set by the government which change annually on the first of July.

Verification - The review process in which the financial aid officer requests documentation from a financial aid applicant to verify the accuracy of the application.

Contact Info

Financial Aid Department
Dr. H. A. Miller Student Services Center
Clovis Community College
417 Schepps Blvd.
Clovis, NM 88101

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FAFSA School Code: 004743

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Friday from 8:00 a.m. to 4:30 p.m.