Financial Need

"Financial Need" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012

Table of Contents

Financial aid is awarded to students who show financial need and who are maintaining satisfactory progress as defined by the institution. To be eligible for financial aid you must:  1) Be a U.S. Citizen, 2) Have a high school diploma or GED or pass the Compass Test; 3) Have financial need.

Each college you list on your FAFSA, and are accepted to, will determine your eligibility for financial aid, also known as your financial need. The eligibility for financial aid is the difference between your expected family contribution and the college’s cost of attendance; also known as your financial need. The gap between the cost of attending the school and the student's resources. The financial aid package is based on the amount of financial need. The process of determining a student's need is known as need analysis.

Except for some loan programs, you must show that you have financial need, according to our requirements. Remember that colleges must apply any outside scholarships or grants toward your unmet financial need or reduce other aid—these awards can’t replace your EFC. You can ask your school to reduce loan or student employment aid rather than grant aid, but most colleges have an established procedure for handling outside scholarships or grants.

Your cost of attendance –(Minus) Your expected family contribution = Your demonstrated financial need

Your financial need will vary from college to college because each college has its own COA. If grants, scholarships or federal student loans don’t cover your total calculated financial need, can you dip further into savings, get a part-time job, look into other options and/or cut your expenses? Or do you need to borrow more?

Except for some loan programs, you must show that you have financial need, according to our requirements. Remember that colleges must apply any outside scholarships or grants toward your unmet financial need or reduce other aid—these awards can’t replace your EFC. You can ask your school to reduce loan or student employment aid rather than grant aid, but most colleges have an established procedure for handling outside scholarships or grants.

However the amount and type of federal aid they provide doesn’t always depend solely on financial need. Once students apply for aid, many are surprised by the amount of aid they receive. So a good rule of thumb is: Don’t assume you’re not eligible. Take the time to complete and submit the Free Application for Federal Student Aid—the FAFSA.

If you don’t receive enough free money to pay for college and you aren’t able to cover your costs with savings or other resources, consider federal student loans. Your interest rate will be low, and you’ll usually have up to 10 years to repay, along with other benefits. You can get a federal loan even if you can’t demonstrate financial need, and there’s no credit check. There are also federal loans for parents. But private loans are usually based on your credit rating and income-to-debt ratio—not financial need—and may require a co-signer. The information in your credit report will determine the interest rates you qualify for.

Depending on your financial need, you may receive both subsidized and unsubsidized loans for the same enrollment period, but the total amount of these loans may not exceed the annual loan limit. Unsubsidized Stafford Loans do not require a student to have financial need. The borrower is responsible for paying all interest on unsubsidized Stafford Loans.

For public institutions, need and non-need-based institutional aid includes aid for graduate and undergraduate students funded by student fees, state General Fund and other institutional income. It excludes privately funded scholarship, grant, fellowship and loan programs.

Need Analysis

The process of determining a student's financial need by analyzing the household and financial information provided by the student and his or her parents (and spouse, if any) on a financial aid form and calculating the amount the family can be expected to contribute to educational costs. The student must submit a need analysis form to apply for need-based aid. Need analysis forms include the Free Application for Federal Student Aid (FAFSA) and the Financial Aid PROFILE. For the federal student assistance programs, the need analysis system is defined by law and results in a number known as the Expected Family Contribution (EFC).

Need Based

Using an applicant's level of financial need as a determinant for financial aid qualification. Financial aid that is need-based depends on your financial situation. Most government sources of financial aid are need-based.

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