Financial Need

You may hear the term 'Financial Need' frequently as you take part in discussions about financial aid. Technically, financial need is defined as the difference between a family’s resources and the total cost of attending college. Read this definition for the cost of attendance.

Many of the details included on the FAFSA form are used in the calculation of financial need. One primary factor, of course, is income and assets for you and your parents (if you are a dependent student) or you and your spouse (if you are married). Click here for further details explaining the difference between 'dependent' and 'independent' students. Quite a few other factors are also involved – family size, number in college, age of parents, and others. Analysis of all this data from the FAFSA results in the establishment of the Expected Family Contribution (EFC) – the amount the government calculates your family can contribute to your higher education for the coming year. Once the EFC is established, the formula for "Financial Need" is simple:

Total cost of attendance at the college – EFC = Financial Need       

The EFC is the same for all colleges you might consider attending. However, the financial need will differ from one college to another since the cost of attending one college will be different from the cost at another college. Here are two examples:

IF:
College "A" costs $20,000
College "B" costs $10,000
The student’s EFC is $6,000

THEN:
Financial Need at College A: $20,000 - $6,000 = $14,000
Financial Need at College B: $10,000 - $6,000 = $4,000