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What is need-based financial aid? Thumbnail

What is need-based financial aid?

Do I qualify for need based financial aid?

Every family that has an aspiring college student has a need of some kind when it comes to tuition bills. Even families that consider themselves “middle-class” can feel great worry and trepidation about looming college costs. A common point of confusion among parents and young people is what exactly need-based financial aid means? Is it only for families that have trouble putting food on the table? As with many questions related to higher education, it’s more complicated than that. Here’s a few things you should know about this type of aid.


What does need-based mean?

Put simply, need-based references the ability of the student and their family to pay for college costs. That’s only part of the story though. This is based on several factors like costs at the college you’ve chosen, year in school, enrollment status, and how much your family can contribute. The last item, called expected family contribution or EFC, has to do with your family financial information and how much a “formula” determines you can contribute towards your student’s college costs.


Who determines need for college financial aid?

For need-based aid from the federal or state government, the decision is based on a pre-determined formula. Go to www.studentaid.gov to learn more about the federal methodology. For college-specific aid programs, this will vary by institution. Check the student aid page on the college’s website or contact them for more information on how they make this determination.



FAFSA and other paperwork

The Free Application for Student Aid or FAFSA is the standard here. Some colleges require you to fill out this form as part of their entrance application. Like the name says, there is not a cost for this form except for your time. I encourage you to take the time as a family to fill this out carefully. This will require pulling together some information like a past tax return to accurately answer the questions. Also, earlier is better with this application. Do not procrastinate with this. Some colleges will require an additional and separate application for their own aid programs. In some cases, this will require a fee.


Should my family apply?

Yes, you should. No matter what you believe the likelihood is for you to receive aid, you should at a minimum complete the FAFSA form. Your college may require you to anyway. There are several confounding factors that determine aid so it’s better to take time to apply than to miss out.


What are some of the forms of aid?

Pell Grants

Pell Grants come from the federal governments and like the name implies is considered a grant. In other words, except in rare cases, there is no repayment for recipients.



The federal work-study program will pair your student with a job. This could be something on-campus or off-campus. Money earned in the program will go toward tuition and other costs. Weekly hours and the type of work will vary.


Subsidized Loans

This is a loan, but it has some differences form other types of student loans. You still must pay this back and there is interest attached to the loan. The distinction is that unlike other student loans, interest does not accrue while your student is in school. This also applies to a period of six months after graduation.


Private Scholarships

“Need” in this context varies tremendously from scholarship to scholarship. Since these are provided by foundations, companies, charities, or individuals they can use whatever criteria they want. Check the specific scholarship to see what they consider “need” and any other criteria they might have.


College-specific scholarships

“Need” in this context will vary from college to college. The college’s financial aid department can use criteria of their choosing. Check the specific scholarship to see what they consider “need” and any other requirements they might have.


State-specific programs

Many states have programs that assist with financial aid needs. Check with the state to see if you qualify. Most of these are based on residency and apply to state schools, but don’t assume that without checking.


“For the protection of wisdom is like the protection of money, and the advantage of knowledge is that wisdom preserves the life of him who has it.” Ecclesiastes 7:12 ESV

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Next Steps

Apply and investigate for opportunities to help with your child’s education including the types of aid we have discussed here. Carefully consider the long-term impact of any programs that require repayment or have strings attached. “Need-based” is a confusing term, but don’t let that keep you away from putting your college-bound son or daughter on the right financial footing.

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