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Last updated May 7, 2024

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What is Demonstrated Need and How Do Colleges Use It?

Key Takeaway

"Demonstrated need" is calculated using the difference between the cost of attendance and your Expected Family Contribution (EFC). Colleges use this number to determine your financial aid. Research each college's financial aid policies and use Net Price Calculators to estimate costs.

Tuition prices are increasing every year, so if you want to get the best deal on your college education, you should familiarize yourself with financial aid terminology.

One of the most important terms to know is “demonstrated need” (not to be confused with demonstrated interest!).

In this post, I’ll break down what demonstrated need is and how colleges use it to help determine your financial aid award.

What is Demonstrated Need?

Demonstrated need is the gap between your family's Expected Family Contribution (EFC) and the cost of attendance (COA) for your chosen college.

COA - EFC = demonstrated need

So if the cost of attendance is $30,000 per year and your EFC is $10,000 per year, then your demonstrated need looks like this:

$30,000 - $10,000 = $20,000

Your demonstrated need would be $20,000.

But to fully understand what demonstrated need actually means, we need to first talk about the EFC.

What is my Expected Family Contribution (EFC)?

Your Expected Family Contribution, or EFC for short, is a number the government calculates when you fill out your Free Application for Federal Student Aid (FAFSA).

To get to this number, the FAFSA takes into account factors like your family's income, assets, and number of college-bound children. In theory, it’s the dollar amount that your family “should” be able to contribute to your education each year.

Now, whether or not you agree with the number of your EFC is a different conversation. But it’s the number that the government and colleges and universities will use to determine your types and amount of financial aid.

Also note that since you fill out the FAFSA every year, your EFC could also change year to year if your financial situation changes.

So once colleges know what your family can (in theory) afford to contribute to your college education, they can assess how much extra money you would need to attend a college or university.

How do Colleges Use Demonstrated Need and EFC to Award Financial Aid?

Okay, with “demonstrated need” and “EFC” in your lexicon, let’s talk about how colleges actually use demonstrated neeed.

Each college has its own approach to granting financial aid based on demonstrated need and EFC. Some colleges may cover a portion of your demonstrated need. Others may cover all or none of it.

So, it's really important to know how each college awards financial aid, especially if you're relying on financial aid to attend college.

Your first step is to look at Net Price Calculators. Every school has a Net Price Calculator that projects your financial aid using your family's financial information. Make sure to do this for each college on your list to get a ballpark figure of what you might have to pay. Download a copy of your Net Price Calculator results! These may come in handy if you want to appeal your financial aid later on.

Next, comb through each college's financial aid website. Get to know their policies and their stance on need-based aid.

If you’re looking for colleges that will cover as much of your need as possible, look for the phrase “meets full demonstrated need.” These colleges guarantee that they will cover your full demonstrated need, oftentimes without loans. Some colleges will meet the demonstrated need of students whose family income is at or below a certain threshold. There can be lots of little details to be aware of, so make sure you’re looking at every school’s website.

Oftentimes schools that are generous with need-based financial aid tend to be quite selective. Thankfully, need-based aid isn’t your only option. You can also look into merit-based aid, full-ride scholarships, or talent scholarships to help you cover the costs of college.

And if you have any questions along the way, you can always reach out to any college's financial aid office with questions, especially once you’ve been admitted.

TL;DR

Demonstrated need is the difference between the total cost of college and your Expected Family Contribution (EFC), which is determined via the FAFSA. Colleges use these figures to calculate how much need-based aid a student qualifies for. Each school has its own policy. To make the best decisions, use each college's Net Price Calculator, give their financial aid websites a thorough read, and don't be shy about reaching out to their financial aid office for more details when necessary.

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