Need-Based Aid

Need-based aid may be awarded in several forms:  grants or need-based scholarships which do not need to be repaid;  work study (an on-campus job where earnings are applied to cost of attendance);  and, loans to either the student or the parents, which must be repaid.   It is important to understand the many types and terms of loans (see Loan section).

Some need-based aid is funded by the federal government (grants), while some is provided by private colleges through their endowments.  There are very competitive schools with large endowments that guarantee to meet 100% of a student’s Demonstrated Financial Need. Most elite schools offer need-based aid only, and do not offer and kind of merit based aid or scholarships.  Many other schools offer a limited pool of need-based aid and award it on a first come, first served basis, making it very important for students with financial need to apply early for aid.

In order to determine whether you qualify for need-based aid a student/family must file what is called the Free Application for Federal Student Aid or FAFSA .  For many highly selective colleges, another form called the CSS Profile Collegeboard.com  is also required in order to be eligible for such aid.   This article describes some ways to optimally position family finances prior to filing the FAFSA.

Although you don't have to be poor to qualify for need-based aid (though it helps), you must demonstrate need (Demonstrated Financial Need).  DFN is the difference between what it costs to attend a particular college (COA) and what you and your family can afford to pay toward those costs (EFC), as determined by the FAFSA.

  • Your financial aid eligibility is equal to the amount of your demonstrated need (DFN).
  • This eligibility amount is the same regardless of whether costs are high or low.  Therefore you will be eligible for different amounts of aid at different colleges.  
  • A college may not be able or willing to meet full need for every student;   it is increasingly common for a student to be admitted to a college but denied the full amount of financial aid needed to attend.  This practice is called “gapping.”
  • Many of the best endowed colleges guarantee to meet 100% of demonstrated need. However, some of these may not consider financial need in making their admission decisions.  Institutions who don’t consider need employ what is called a “need blind” admission policy.   For more information on Need Blind and Need Aware (or Need Sensitive admissions policies please see Lynn O'Shaughnessy's article Need Blind vs Need Aware.

Resources/Links

USDOE Student Aid 

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