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How do schools determine NEED?


The federal government provides this equation for schools to determine financial need:

Cost of Attendance – EFC = Need

Cost of Attendance (COA)

The cost of attendance is not the bill you receive from your college, it is the total amount it may cost to attend college each year. The Cost of Attendance (COA) includes direct costs like tuition and fees, on-campus room and board and allowances for indirect costs like books, supplies, transportation, loan fees. It can also include other expenses like an allowance for the rental or purchase of a personal computer, costs related to a disability, or costs for eligible study-abroad programs.

Expected Family Contribution (EFC)

The expected family contribution is a measure of a family’s financial strength and is calculated from the information submitted on the FAFSA.  The family’s assets, benefits and income (taxed and untaxed) are all considered in the formula. The number of members in the family, number of students in college and age of the parents are also considered.

The EFC is constant; it does not vary based on the cost of the institutions the student is considering.


Need is the difference between the Cost of Attendance and the EFC.

Why is this important?

It is important to keep this in mind when considering multiple schools with varying costs. In the example below:
1 is a private 4 year college
2 is a public 4 year college
3 is a 2 year community college

The COA is very different at each institution but the EFC is constant, which means that a student’s need is much larger at a 4 year private than it is at a 4 year public or 2 year school. A 4 year private school is therefore able to offer much larger need based scholarships and can be quite competitive with a 4 year public.

Financial Aid Need formula