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.
