What Does It Really Mean To Have “Financial Need?”

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Flickr user Jay White

You probably see a lot of documents, articles, or websites talking about “financial need,” especially when it comes to FAFSA, student loans, and scholarships. However, there is a bit more to financial need than you may realize. This is a quick run down dispelling some of the myths and explaining the terms that surround demonstrated financial need and financial aid.

What is Cost of Attendance?

Before you can even start to think about your financial need, you should be looking at the cost to attend a college or COA. Don’t rule out a school simply because it seems too expensive. This is where financial aid comes to help. The COA takes your tuition, cost of supplies like books, room and board, and other school related expenses into account.

This number is needed to determine just how much of a gap is between what your family can contribute and the actual cost of attendance. However, there are some myths that surround “financial need” and what you can qualify for.

Not Only Low Income Families Qualify

You may have heard the myth that you have to be in a low income family to qualify for financial aid, but this isn’t true. While your family’s income does have a role, it really also depends on what college you’re attending.

Financial need is calculated by taking your college’s cost of attendance and subtracting how much your family is expected to contribute (also called Expected Family Contribution or EFC). The number remaining is your demonstrated financial need.

An example would be if your family is middle income, but you’re choosing to attend a very expensive private college, your family may not have the means to cover the tuition and other expenses. Therefore, this means you have demonstrated financial need. This affects how much federal aid the Department of Education or your school will offer you.

You Aren’t Required To Have $0 EFC

Another myth that surrounds financial need has to do with the expected family contribution (EFC). Your EFC is determined by income, benefits, and assets. It also takes into account if you have other family members attending college.

It’s extremely similar to the belief that only low income families can qualify for financial aid. Your family can contribute money to your college education, but if it’s not enough to pay for everything, financial assistance can fill in the gap. If your college costs $40,000, but its determined your family can only contribute $10,000, you may qualify for $30,000 in financial aid.

No matter what, you should absolutely be filling out the FAFSA or Free Application for Federal Student Aid. You may find that the government is willing to lend you more than you thought. The FAFSA is also used by colleges to help determine financial aid within the school or choose financial need scholarships and grants. Independent scholarships sometimes also request that you have demonstrated financial need to apply. It’s essential to not skip this step, even if you believe you won’t get a dime from the paperwork, as there are plenty of other benefits aside from loans from the Department of Education.

And if financial aid isn’t enough to cover everything, you’ll need to find a student loan that fits you. Use College Raptor’s free Student Loan Finder to compare lenders and interest rates side by side!


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1Variable interest rates start from 4.12% APR to 10.98% APR. We also offer fixed interest rates from 5.74% APR to 11.85% APR. Click here for important information. Terms, conditions, and limitations apply.
College Raptor is not a loan lender and does not assume responsibility for suggesting a loan to a user who may not be eligible for it. Rates, terms, conditions, eligibility, approval, and other considerations are the decisions of the lenders and may vary depending on which lender or marketplace the user selects. We urge users to carefully consider and review all loan options and terms before committing to taking out a loan.

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