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What is Need-Based Financial Aid?
Need-based financial aid is a type of award that is solely based on your family’s financial situation. This is one of the most common types of financial aid that students will use to pay for college. In fact, according to a 2020 report from Sallie Mae, nearly half of students paid for college with grants.
Jump ahead to:
- What does need-based financial aid include?
- How is need-based financial aid awarded?
- Applying for need-based aid
- Do I need to repay need-based aid?
- Reapplying for need-based aid
Keep on reading to learn everything you need to know about need-based grants, loans, and scholarships!
What does need-based financial aid include?
Need-based financial aid is awarded by the federal government, states, and colleges. The federal government is the largest awarder of need-based aid including:
Some private organizations may also award additional need-based scholarships. For instance, the Questbridge program is a scholarship program that aims to support high-achieving, low income students in the United States.
How is need-based financial aid awarded?
Need-based financial aid is awarded according to a student’s demonstrated financial need. College financial aid offices will assess this through the EFC or Estimated Family Contribution which is a number used by your school to calculate how much financial aid you are eligible to receive. An EFC is generated after a student successfully completes their Free Application for Federal Student Aid (FAFSA).
The EFC number can range from 0 (which means they estimate that you can’t afford to spend anything) all the way up to the full cost of attendance.
Estimating need-based financial aid
If you are interested in estimating need-based financial aid, we’ve got a great tool for you! The Net Price Calculator is a free tool that every college offers to provide an estimate of financial aid!
The Net Price Calculator is college-specific as every college’s financial aid methodology is different. This is a great way to start researching what need-based financial aid might look like for you and your family.
As a bonus, some colleges will also estimate merit scholarships as part of their Net Price Calculator. Usually they will ask a few questions about testing, grades, and classes.
Remember, the Net Price Calculator is not 100% accurate and you will not receive your official financial aid until you actually apply for financial aid and are accepted by the college.
Applying for need-based aid
The most important form for applying for need-based financial aid is the Free Application for Federal Student Aid or FAFSA. The FAFSA is how students access need-based grants, loans, and work study.
Some colleges and universities may also require the CSS Profile. The CSS Profile goes into a bit more depth than the FAFSA and may capture additional data points for the college.
Remember, simply applying for need-based financial aid does not ensure that you will actually receive need-based financial aid. If you are accepted to a college and applied for financial aid, you will receive a financial aid award letter that explains the aid that you were awarded. These award letters may come in the mail, but will more likely show up in your online student portal when they’re available.
Do I need to repay need-based aid?
Some types of need-based financial aid will need to be repaid. This means that grants and money earned through a work study will not need to be repaid. However, federal student loans, like the Federal Stafford Direct Loan, are loans that will need to be paid back in the future.
This is one of the reasons that students should still pursue merit scholarships and outside scholarships in addition to need-based financial aid.
Reapplying for need-based aid
Need-based grants, loans, and work study are only good for a single academic year. This means that you must reapply for need-based aid each year you are in college. Each year, you will need to resubmit the FAFSA as well as the CSS Profile so that you can continue to receive financial aid for each year of college. Make sure you know your college’s financial aid deadlines so that you don’t miss reapplying each year and reach out to your college’s financial aid counselors for support!
Key next steps for students
- For every college you are considering, use their Net Price Calculator to estimate your need-based financial aid package.
- To actually apply for financial aid you will have to complete and submit the FAFSA by the deadline.
- Some colleges may require the CSS Profile as an additional application. Remember, every college will have a different CSS Profile deadline!
- If you are a current student, you will also have to reapply for financial aid each year you are in school!