Glossary of Terms

Financial Aid Decoded

Common financial terms or phrases and what they actually mean

Cost of Attendance (COA): The estimated amount it will cost to attend a college for one academic year. This amount includes:

  • Tuition: the amount it costs to enroll at a college and take classes.
  • Housing and Food: the amount it costs to live at the college in their residence halls or other housing. (If you plan to live at home and commute to school, you would not pay this.)
  • Estimated living expenses: extra costs for things like food, utilities, rent (if living off-campus) or other general everyday expenses.
  • Estimated transportation costs: extra costs for things like gas (if driving to/from home), airfare (if flying to/from home), or sometimes public transportation like buses and trains.
  • Estimated books and supplies: extra costs for things like textbooks, notebooks, and other materials you might need for your classes.
  • Miscellaneous costs: extra costs or fees for things like college services, events, programs, weekend activities, etc.

Direct Costs: Expenses that are paid to the college, such as tuition.

Entrance Counseling: A short information session (20-30 minutes long) that explains your rights and responsibilities as a loan borrower, and must be completed by the student before loans are disbursed to pay for school.

Expected Family Contribution (EFC)/Student Aid Index (SAI): A measure of your family’s financial strength that is calculated according to federal guidelines and is used to determine your eligibility for need-based financial aid. You may see both terms used interchangeably because EFC is the old term and SAI is the new term introduced for the 2023-2024 application cycle.

Federal Pell Grant: A grant provided by the federal government to qualified students who demonstrate above-average financial need. In order to qualify, your EFC (Expected Family Contribution) must be below a certain level set by the U.S. Department of Education. This type of financial aid typically doesn’t need to be repaid, and the college would automatically apply this to your aid package if qualified.

Federal Work-Study (FWS): A program that provides part-time employment to college students who need the earnings to help meet their cost of attendance.

Gift Aid: A type of financial aid that typically doesn’t need to be paid back. Gift aid comes with titles such as grants, scholarships, remissions, waivers, or other awards. These can be based on many factors, including (but not limited to) financial need, academic excellence, athletics, musical talents, and many other things. The only time gift aid might need to be repaid is if there are terms specified as a condition of the gift that have not been met (e.g. maintaining a certain GPA).

Grant: A form of financial aid that does not need to be repaid, also known as gift aid. Grants are typically based on financial need. (Please refer to “gift aid” to learn more!)

Indirect Costs: Expenses that are paid to someone else other than the college, such as rent to a landlord if you’re living off-campus.

Loan Promissory Note: A document you sign that says you promise to pay back any of the loans you take out to pay for college, and it must be completed before loans are disbursed.

Net Cost: This is the amount of direct and indirect costs leftover after all gift aid (scholarships and grants) have been subtracted. See also: out-of-pocket cost.

Out-of-pocket Cost: The difference between cost of attendance and all your gift aid. Out-of-pocket cost can be covered through a variety of sources, including savings, income, and loans.

Student Aid Index: See Expected Family Contribution above.

Student Employment: A program that provides part-time employment to all Merrimack students, including students who did not file the FAFSA or are not eligible for Federal Work Study. Students are paid through college funds as opposed to federal funds.

Student Loan: A form of financial aid that must be repaid with interest. Educational loans have varying interest rates and repayment terms.

  • Federal Direct Student Loan: A type of loan provided by the U.S. Department of Education through the FAFSA application. You would be responsible for making payments starting six months after you are no longer taking classes full-time (for example: six months after you graduate).
  • Subsidized Loans: A type of loan where the government pays the interest on the loan while the student remains enrolled in college at least half-time. Students must meet a certain level of financial need in order to qualify for this type of loan.
  • Unsubsidized Loans: A type of loan where interest starts to accrue while the student is in school, and the student is responsible to pay the interest back on top of the loan amount.

Verification: The process of confirming that the information provided on your FAFSA is accurate. You might be asked to submit additional forms, identification, or other documents.

Still have questions? Please contact the Office of Financial Aid at 978-837-5186 or

Missing something? Check out our Glossary of Admission Terms!