As of 2020, 86 percent of college students nationwide receive some type of financial aid - whether it be through scholarships or federal aid programs, according to usnews.com. This trend has risen considerably since 2000, up to 70 percent. While Butler Community College (BCC) is much more affordable than many schools, understanding how financial aid can benefit you has grown to be integral to affordably attending college.
The Free Application for Federal Student Aid, or FAFSA, takes a number of factors into account when deciding eligibility for aid. Numerous questions are posed within the form, but aid is given out according to need. Due to the complexity of these factors, the FAFSA calculates eligibility using the Estimated Financial Contributions (EFC). Heather Ward, BCC Director of Financial Aid, helps identify these factors.
"The EFC is used to determine all types of Federal Student Aid for which a student may qualify - grants, loans and Federal Work Study. It does not use an income bracket. There are several factors that tie into the EFC calculation, with the larges being household income, assets, family size and number [of family] in college. Other factors also play a smaller contribution to the EFC," Ward says.
It is difficult to determine precisely how much aid that the EFC may allocate, but nationally it is reported that 33 percent of undergraduates average $8,285 in loans received, and 51 percent receive $5,179 in grants. Doing the FAFSA is the only way to know precisely how much aid can be received, and what type.
There is an important distinction between the aid afforded to students: grants, loans and work programs. Grants, like the commonly awarded Pell Grant, is money that does not need to be paid back once granted - assuming that academic performance is maintained. Often, financial aid does require passing academic performance, as well as either part-time or full-time attendance. Otherwise, there is a risk of losing all aid, and possibly any eligibility for aid in the future. Ward also outlines an example for how much Pell can award students.
"For the 2020-2021 academic year, the maximum Pell Grant for a full-time fully eligible student is $6,345, or $3172 ($3,173) per semester. Amounts are reduced based on eligibility (determined by EFC) and enrollment status. Some students are not eligible for Pell. Students may receive Pell for a maximum of 12 full-time semesters over the course of their lifetime," Ward says.
However, loans are different from grants - they must be paid back. There are two types of loans EFC allows students to be eligible for: subsidized and unsubsidized. Subsidized loans will give a fixed amount and must be paid back that fixed amount over time, while unsubsidized loans accrue interest over time. As long as a student is enrolled in at least six credit hours, these loans do not need to be paid, but unsubsidized loans will continue to accrue interest. A grace period exists for 6 months after attendance ends before payments must begin. Ward says, however, that interest amounts are currently fixed.
"With unsubsidized student loans, interest begins at the time of disbursement. The current interest rate for undergraduate student loans taken between July 1, 2020, and July 1, 2021, is 2.75 percent. The interest rates are fixed for the life of the loan. Interest rates for new loans change every July. Students are encouraged to pay their interest as they are able, to help reduce their overall loan debt. Currently, in response to the global pandemic, there is a pause in interest accrual and required payments. This is in effect until September 30, 2021," Ward says.
Federal work study jobs are the final type of aid that can be received. These jobs are typically part-time, paying at least minimum wage to assist students in paying for college. At BCC, there are a number of jobs that are hiring on campus, though positions are limited. Check employment.butlercc.edu often for employment opportunities as well.
The FAFSA will be changing soon, though many of the factors that it uses to determine eligibility will remain.
"On December 27, 2020, Congress passed the FAFSA Simplification Act that changes the way in which student eligibility is calculated. This Act greatly reduces the number of questions on the FAFSA and will now use a Student Aid Index (SAI) that is keyed off of federal poverty guidelines, rather than the EFC. The U.S. Department of Education is expected to implement these changes by the 2023-2024 academic year at the latest," says Ward.
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