Student-centric advice and objective recommendations
Higher education has never been more confusing or expensive. Our goal is to help you navigate the very big decisions related to higher ed with objective information and expert advice. Each piece of content on the site is original, based on extensive research, and reviewed by multiple editors, including a subject matter expert. This ensures that all of our content is up-to-date, useful, accurate, and thorough.
Our reviews and recommendations are based on extensive research, testing, and feedback. We may receive commission from links on our website, but that doesn’t affect our editors’ opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted. You can find a complete list of our partners here.
What is Demonstrated Financial Need?
Many forms of financial aid require a student to demonstrate financial need. Finding out about demonstrated financial need is one way that schools determine how much financial aid a student is eligible for. Continue reading to learn more about demonstrated financial need, how it’s calculated, and how it’s used!
Related: What is need-based financial aid?
What is demonstrated financial need?
Demonstrated financial need is the difference between a school’s cost of attendance (COA) and the student’s expected family contribution (EFC). A student demonstrates financial need if their EFC does not equal the COA.
Demonstrated financial need is not a static number–it can change from year to year. Typically, a school’s COA will increase annually, raising a student’s demonstrated financial need. Additionally, the demonstrated financial need will change as a family’s income and assets change. These factors are what help determine the EFC.
A student’s demonstrated financial need shows that they have a valid need for financial assistance. However, your demonstrated financial need is not a guarantee of how much aid you will receive. It’s the job of the financial aid office to compare your EFC to their institution’s COA and apply any grants, scholarships, and student loans to try and meet the student’s financial need.
How is it calculated?
To determine your demonstrated financial need, subtract your EFC from the school’s COA. A student’s demonstrated financial need will vary from school to school, because some schools have a higher COA than others.
Say, for example, a school’s COA is $20,000 and the student’s EFC is $8,000. $20,000 – $8,000 = $12,000. Therefore, the student’s demonstrated financial need is $12,000.
How is it used?
Demonstrated financial need is used by colleges to determine a student’s eligibility for need-based financial aid. Examples of need-based federal aid are Pell Grants, Federal Work-Study, and Direct Subsidized Loans. These programs are for students who demonstrate significant financial need. Demonstrated financial need can also be used to calculate how much a student may receive in school- or state-specific financial aid.
A few colleges promise to cover 100% of a student’s financial need. For example, Brown University, Bowdoin College, Davidson College, Harvard University, and Princeton University meet all of a student’s demonstrated financial need with grants, scholarships, work-study, and loans. In the example above, each of these schools would provide $12,000 in aid to the student.
However, most schools are not able to meet all of a student’s demonstrated financial need. Many students will have to turn to private scholarships, part-time employment, and personal savings to cover the costs of their education.
Remember, it’s always important to go through the financial aid process at a college before it’s written off as “too expensive.” Sometimes colleges with the highest price tags have the best ability to meet the student’s demonstrated financial need through free institutional grants and need based scholarships. To find great scholarship opportunities that can make any school affordable, check out our free scholarship search tool, which custom-matches you with vetted scholarships!