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Updated: April 16th, 2024
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!
Simply put, demonstrated financial need is the difference between a school’s cost of attendance (COA) and the student’s Student Aid Index number. A student demonstrates financial need if their EFC does not equal the COA. You can also use the equation below to visualize how these three things relate.
| Cost of attendance – student aid index = demonstrated financial need |
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 SAI.
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.
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.
You can use the example equation below to see how you can calculate your need.
| $20,000 (COA) – $8,000 (SAI) = $12,000 demonstrated financial need |
Colleges use demonstrated financial need to determine a student’s eligibility for need-based financial aid. Examples of need-based federal aid are:
These programs are for students who demonstrate significant financial need. Demonstrated financial need can also 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. The colleges below 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 writing it off as “too expensive.” Sometimes colleges with the highest price tags have the best ability to meet the student’s demonstrated financial need through 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!
A school that meets 100% of demonstrated financial need means that whatever amount is left after you subtract your student aid index number from the cost of attendance will be covered in full. This means that some students may receive more than other students as everyone has a different level of demonstrated need.
Financial need is calculated by looking at the cost of attendance and subtracting your student aid index amount. Cost of attendance is the total cost of tuition, fees, books, room and board, and any other academic expenses that you will have to pay in order to attend school.
A letter of financial need, also referred to as a statement of financial need , includes your family’s background, what your financial situation currently looks like in your household, and other pertinent details. If you currently need to write a statement of financial need, we recommend that you check out our article about that topic where we go in depth about how to write your statement from start to finish.
