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Understanding Financial Aid for College: Categories, Types, and Sources

Financial aid is money provided to help students cover the costs of college from sources other than their families. It comes in the form of grants, scholarships, loans, and work-study programs. Financial aid can be obtained from various sources such as the federal government, states, colleges, private organizations, civic groups, and employers. Understanding the different types of financial aid and where to find them is crucial for students and families navigating the college financial aid process.

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Understanding Financial Aid for College: Categories, Types, and Sources

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  1. Welcome to Financial Aid Night 2023-2024 Academic Year Matt Pfannenstiel Associate VP of Enrollment McPherson College

  2.  What is financial aid? Categories, Types, Sources  Free Application for Federal Student Aid (FAFSA) FAFSA Simplification Changes FSA ID SAI (Student Aid Index) Topics for Tonight  Next steps

  3. What is Financial Aid?  Money supplied by a source other than the family to assist with the costs of a student attending college  Types of Financial Aid  Grants  Scholarships  Loans  Work Study

  4. Grants Free money or Gift Aid Federal Grants Supplemental Grants Does not have to be repaid Often based on financial need

  5. Scholarships Free money or Gift Aid Does not have to be repaid Based on academic achievement, merit, athletic ability, skills, etc.

  6. Loans Money that students and parents borrow to help pay for college Repayment usually begins after education is finished (typically 6 month grace period)

  7. Employment (Work Study) Allows students to earn money to help pay educational costs Paycheck Non-monetary compensation such as room and board

  8. Sources of Financial Aid Federal Government States Colleges Private Sources Civic Organizations and Churches Employers

  9. Federal Government Largest source of aid Aid awarded primarily on the basis of need Must apply EVERY YEAR using the FAFSA

  10. States Residency Requirement Award aid on the basis of both merit and financial need Uses FAFSA info Deadlines vary by state (April 1)

  11. Private Sources Foundations, businesses, charitable organizations Deadlines and application procedures very widely

  12. Civic Organizations and Churches Research what is available in the community To what organizations and churches do student and family belong? Application process usually spring of senior year Small scholarships add up!

  13. Employers Many companies may have scholarships available to the children of employees Some employers may pay for a portion of college expense provided that the student work there for X amount of years afterwards

  14.  Federal Pell Grant  Federal Supplemental Educational Opportunity Grant (SEOG)  Federal Work Study  Direct Student Loans  Direct Plus Loans Federal Aid Programs

  15. Pell Grant Largest grant awarded by Federal Government Pell grant is not necessarily tied to SAI results  Maximum Pell (not determined)  Calculated Scheduled Pell  Minimum Pell

  16. SEOG Supplemental Education Opportunity Grant Awarded both on need and institutional timelines

  17. FWS Federal Work Study – Allows student to work on campus and at off campus partnerships Provides part time employment – typically no more than 20 hours Even if you don’t qualify for FWS, you may still be able to have an on campus job

  18. Federal Direct Student Loans Guaranteed by completing the FAFSA for 1styear students Repayment begins after 6-month grace period Subsidized vs Unsubsidized

  19. Direct Student Loan Limits Classification Dependent Sub./Unsub. Total Independent Freshman $5,500 $9,500 Sophomore $6,500 $10,500 Each Remaining Year $7,500 $12,500 Graduate Student N/A $20,500

  20. Federal Direct Parent Loan (PLUS)  Parents of dependent undergraduate students  Repayment begins after disbursement unless parent chooses to defer payments  Deferment during enrollment period  Deferment during 6 month grace period  If a parent is unable to borrow (denied) a parent PLUS loan, a student may be eligible for additional unsubsidized loan money

  21. What will remain the same  FAFSA is still free  FAFSA is still submitted at studentaid.gov  FAFSA is still an application that evaluates the family's financial strength  Dependent students must still provide parental information  FAFSA is still based on prior prior year taxes  Although the 2024-25 FAFSA won’t open until end of December 2023, it is expected to open on October 1 in the years to come

  22. Some significant changes  Contributors  Consent  Student Aid Index (SAI)  Changes to included or excluded items in SAI calculation  Pell eligibility  Provisional Independent student status  Questions excluded on new FAFSA

  23. A contributor is anyone that is asked to provide information on the FAFSA form. All contributors must have an FSA ID (Studentaid.gov Account) Who is a Contributor Student Student’s spouse Biological or Adoptive Parents Parents spouse (step parent)

  24. Students answers on the FAFSA form will determine which additional contributors (if any) will be required Contributors continued Students will invite contributors to complete their portion of the FAFSA. Students will need contributors name, DOB, SSN (if they have one) and e-mail address.

  25. Steps for a Contributor to complete FAFSA •Receive e-mail •Create FSA ID if they do not have one already (SSN is no longer required) Contributors continued •Log onto studentaid.gov with FSA ID •Review information about completing their section •Provide required information on students FAFSA

  26. Dependent students of divorced parents (biological or adoptive)  Use the parents that has provided more financial support from the previous 12 months Contributors continued  If both parents provide equal amounts of support, use the parent that has the higher income

  27. All contributors must now provide consent for the IRS to transfer tax data to the FAFSA and share with schools Contributors must provide consent even if they did not file a tax return Consent If any contributor does not consent, the student is ineligible for federal aid With few exceptions, students/parents will no longer be able to manually add tax data to the FAFSA

  28. Student Aid Index (SAI) SAI replaces EFC SAI can be -1,500 to 999,999

  29. What’s my next steps?  Students and all contributors should apply for an FSAID  Use a personal email (not school)  Remember passwords  Be accurate in information

  30. Questions?? Thank you!

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