Defining your Financial Need

The needs analysis considers your parents’ income, your earnings and your family’s net assets (cash, bank accounts, trusts, investments) to determine your “Expected Family Contribution” (EFC).  The form used for the needs analysis to determine the EFC is called the FAFSA– Free Application for Federal Student Aid.  The FAFSA is very important. It helps schools decide how much financial aid they should offer you.

Home equity is no longer considered in the needs analysis calculation for federal and state aid. Home equity may, however, be considered by the college in determining your eligibility for institutional aid.

The needs analysis also takes into account family expenses. These include income taxes paid, housing, clothing and food costs, number of family members, number of household members in college or vocational school, and your parents’ need to save for retirement.

The colleges to which you apply will review the results of the needs analysis to make a final determination on how much you and your family are expected to contribute toward your educational costs. Your financial need is determined by subtracting your expected EFC from the annual cost of your education.

To meet your determined financial need, the college may combine various types of aid into a financial aid package. This package may include grants, scholarships, a part-time job and loans. If your award includes a Stafford Loan from the Federal Family Education Loan Program (FFELP), you will need to complete a separate application.

Some colleges require you to complete forms in addition to the FAFSA, some of which carry a fee. Usually these colleges provide large amounts of institutional aid. They need added information for a more accurate picture of your family’s financial circumstances.

Within four weeks (two weeks if you file online) after mailing your FAFSA, you will receive a Student Aid Report (SAR). This report gives information on your eligibility for a Pell Grant. Read it carefully. The college will use the information on the SAR in deciding whether to include a Pell Grant in your financial aid award, if you are eligible.