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As we discussed in the Types of Aid module, some aid is based on financial need and some is not. But what exactly is "financial need?"
Module Transcript
Many families assume they don't have a "financial need" since they live a comfortable lifestyle. In fact, the amount of your family's need depends on many factors, including not only income, but also the cost of each school and the number of kids in college at one time.
Your financial need is determined by formulas that take into account student and parent income, their savings, and the cost of attending a particular school.
So your "Financial Need" equals Your Cost of Attendance minus Your Expected Family Contribution
The "cost of attendance" includes expenses such as tuition, room and board, student fees, textbooks, supplies, transportation, and other costs, which vary per school.
The "expected family contribution" is determined by family income, student and parent assets, the size of the household, summer earnings expectations, and many other factors. This amount will be determined by a federal formula.
Your financial need is what remains after subtracting the family contribution from the cost of attending school - the higher the amount, the greater the need.
The most important thing to understand here is that "financial need" is relative. Don't forget that the cost of attendance varies from school to school. A student who would not be eligible for financial aid at an inexpensive school may be eligible for a great deal of aid if they choose a costly school. Never let a school's tuition discourage you from applying - the school with the higher tuition may just be cheaper after you receive your aid package.
One of the biggest factors in determining how much aid you are eligible for is your relationship with your parents.
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