Personal Finance

Need-Based Financial Aid – A helping hand for students who need financial help

Need-based financial aid is one of the main financial aid packages to assist those students who need financial help. Need-based financial aids are usually gifted to students by the state government or federal sources. These types of financial aid packages are intended to assists students to help their college expenses. As all other financial aid packages, the rules and regulations of need-based financial aid is based on the federal financial aid rules.

Need-based financial aid packages are intended to compensate the difference between what you or your family can afford to pay and what college costs. Grants are usually considered as a need-based financial aid. Certain scholarships are also considered as a need-based financial aid. One of the main advantage of grants and such scholarships is that these types of financial aid programs need not have to be repaid. Loans and work-study programs also come under need-based financial aid programs. These types of loans offered to students as need-based financial aid features lower interest rates. Work-study programs are funded by the federal government and some states and are included in most students’ financial aid packages. These programs helps the students’ to earn money to pay for their educational expenses.

Need-based financial aid is awarded to students only after considering their family’s financial situation. Most colleges and universities calculate the eligibility for a need-based financial aid by subtracting the Expected Family Contribution (EFC) from the Cost of Attendance (COA). However, the amount of grants varies according to the state you reside and also in which scheme you are awarded by a grant.

The federal government’s definition of need-based financial aid compares your or your family’s income and savings to the cost of attendance of the college you plan to attend. Hence, if you are attending a local community college then your need-based financial aid will be less, while if you selected to attend a higher priced college then your financial need may be large.

Now the question is how to search and apply for a need-based financial aid. For this, you need to contact your State Department of Higher Education. Keep in mind that almost every state will have a need-based financial aid program for its residents. These types of programs are limited to the students who join a college in the respective state. For example a need-based financial aid program offered by the State of Arizona will be provided for eligible students of Arizona who decide to attend in Arizona state colleges and universities. Also, for receiving benefits from such need-based financial aid, the student need to be enrolled, or accepted for enrollment, or must be attending at least half-time in an approved postsecondary educational institution. Also check the various types of grants offered by the colleges. For more information about this you can check with the college websites, catalogs, and financial aid offices.

To receive a need-based financial aid you have to complete the Free Application for Federal Student Aid (FAFSA), no matter how many colleges you are considering. The FAFSA features a section for students to record the colleges to which you need your information to be sent. Don’t forget to check with each college to verify if there are any additional forms required.