What is Need-Based Aid? Exploring Financial Options

Need based aid is financial assistance that is based on the student’s and family’s financial circumstances. It is usually determined after a student fills out the FAFSA application and can consist of Federal, State and institutional financial aid.

Need-Based Aid: FAQ Section

What Are the Types of Need-Based Aid?

Need-based aid can fall under several categories, so it’s important to review each type to understand how they work. Need-based aid can come in the form of:

• Pell Grants:When a student files the FAFSA, their eligibility for a Pell grant is determined based on their family size, income, and other financial circumstances. The amount is determined each year for each student and is also based on the number of credit hours a student takes. It does not need to be paid back.
• Work Study: This type of need-based aid is provided through part-time employment. This can be a campus job or one that is affiliated with the university. Undergraduate and graduate students are eligible for work-study programs. What’s unique about them is that students can use them to pay any expenses. Work Study can be funded by the federal government or by the institution and each may have different qualification requirements.
• Federal Student Loans: There are two types of federal student loans: subsidized and unsubsidized. The difference between the two is that interest rates for subsidized loans do not accumulate during school. Each school will determine eligibility for subsidized loans based on their cost and the results from the FAFSA form. Any student is eligible for unsubsidized loans. Both require submission of the FAFSA form.
• Need-Based Scholarships:Some scholarships are available to students who demonstrate financial need based on their parent’s economic situation. Students would have to contact their school and financial aid department to explore funding options.

How Is Need-Based Aid Determined?

How much need-based aid a student is eligible for depends on several factors. These factors include:

• Student Aid Index (SAI), previously referred to as “expected family contribution,” which is determined by the FAFSA form
• Year in school
• Enrollment status
• Cost of attendance at your school

Note that there is a simple formula most universities use to determine if students demonstrate financial need. The formula involves subtracting the Student Aid Index (SAI) from the cost of attendance at a school.

What Are the Benefits of Investing in Need-Based Aid?

By investing in need-based aid, higher education institutions are ensuring that low-income and often middle-income students have the opportunity for a quality education, regardless of their ability to pay. With need-based financial assistance, students can focus entirely on their education, instead of having to worry about managing student debt after graduation.

Institutions that offer financial relief to those who need it the most are also encouraging academic success for all students.

Explore Financial Aid Options with EAB

EABis here to help you understand and optimize your financial aid strategy. Discover how EAB’s Financial Aid Solutions empower your institution to enhance support for low-income students, ensuring equitable access to education.