What is need-based aid?
What does it mean?
Need-based aid is financial aid that is awarded based on a student’s financial status. To qualify for federal and most college need-based aid, students must submit the Free Application for Federal Student Aid (FAFSA). The FAFSA calculates an Expected Family Contribution (EFC). A student’s financial need is the difference between the Cost of Attendance (COA) of a college and her EFC. Financial aid awarded to meet the difference is considered need-based aid.
How does it affect how much you pay for college?
Theoretically, need-based aid means that you should never pay more than your EFC to attend college. If your EFC doesn’t cover the Cost of Attendance, need-based aid should make up the difference.
However, the amount of need-based aid is limited. Students may be eligible for Pell Grants from the Federal government but that’s just under $6,000 per student. The majority of non-loan financial aid comes from the actual colleges. And most colleges don’t have the funds to meet 100% of all students’ financial need.
So even though students may be eligible for need-based aid, chances are they will not receive the full amount. Since some colleges provide more need-based aid than others, students with lower EFCs should target schools most likely to meet need.