What Does Remaining Need Mean on Financial Aid?

Higher education is a significant investment. Financial aid programs help make college accessible by assisting with educational expenses like tuition, fees, and living costs. Understanding concepts like “remaining need” helps families plan for college funding.

Understanding What Remaining Need Signifies

“Remaining need” is the dollar amount a student or family still needs to cover educational costs after initial financial aid is applied. It represents the gap between a student’s total cost of attendance and committed financial resources. This figure indicates the unfunded portion of college expenses.

The concept is understood through a formula: Cost of Attendance (COA) minus Expected Family Contribution (EFC) minus Aid Awarded equals Remaining Need. This amount must be covered through other means, such as additional loans, out-of-pocket payments, or alternative funding sources.

How Financial Need is Determined

Financial need is determined by considering the cost of attending an institution and a family’s ability to contribute. This assessment begins with the Cost of Attendance (COA), which is an institution’s estimate of a student’s expenses for one academic year. The COA includes direct costs like tuition and fees, and indirect costs such as room and board, books, supplies, transportation, and personal expenses. These figures vary based on factors like residency or living arrangements.

The Expected Family Contribution (EFC) is calculated using information from the Free Application for Federal Student Aid (FAFSA). The EFC indicates a family’s financial strength and the amount the federal government believes a family can contribute. This calculation considers the student’s and parents’ income from two years prior, assets, family size, and the number of family members attending college. For dependent students, both parent and student income and assets are assessed. For independent students, only their own financial information is used.

Assets included in the EFC calculation are bank accounts, non-retirement investments, and 529 college savings plans. Retirement accounts, primary residence equity, and small businesses with fewer than 100 employees are excluded. Allowances for taxes and living expenses are subtracted from available income, with a portion of the remaining income and assets factored into the EFC.

Exploring Options to Address Remaining Need

Addressing the remaining need requires exploring various funding avenues beyond initial grants and scholarships. Federal student loans are often a primary option, offering distinct advantages.

Direct Subsidized Loans are available to undergraduate students who demonstrate financial need, and the government pays the interest while the student is in school at least half-time, during a grace period, and during deferment periods. Direct Unsubsidized Loans are available to both undergraduate and graduate students, regardless of financial need, though interest accrues from the time the loan is disbursed. Additionally, Direct PLUS Loans are available to graduate students and parents of undergraduate students, but these require a credit check and may have higher interest rates. Federal loans generally offer fixed interest rates and flexible repayment plans, including income-driven options.

Private student loans, offered by banks, credit unions, and other financial institutions, can help cover any remaining costs after federal aid options are exhausted. These loans are credit-based, meaning approval and interest rates depend on the borrower’s or co-signer’s credit history. Private loans can have either fixed or variable interest rates and offer fewer borrower protections and repayment flexibilities compared to federal loans. It is advisable to compare terms from multiple lenders, as rates and conditions can vary.

Many colleges offer institutional payment plans, allowing families to pay the remaining balance in installments over the academic year. These plans can help manage cash flow and avoid the need for additional loans. Students can also explore Federal Work-Study programs, which provide part-time jobs for students with financial need. While earnings from work-study are paid directly to the student and are not immediately applied to tuition, they can help offset personal and educational expenses.

Seeking external scholarships from private organizations, foundations, and community groups can further reduce the remaining need. These scholarships are often based on merit, specific interests, or demographics and do not require repayment. Personal savings or contributions from family members remain a direct way to cover any unfunded portion of college costs. Combining these strategies can help bridge the gap between awarded financial aid and the total cost of attendance.