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.
Where can you learn more?
Connect with other parents figuring out how to pay for college
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