What is considered "financial need" for federal financial aid eligibility?

Financial need for federal financial aid eligibility is determined by calculating the difference between the cost of attendance at a particular institution and the expected family contribution (EFC). The cost of attendance encompasses tuition, fees, room and board, books, supplies, and other associated costs, while the EFC represents what the government believes the family can reasonably contribute toward the student's education. By subtracting the EFC from the total cost of attendance, schools and the federal government can ascertain a student's financial need. This concept is foundational in determining the amount of need-based aid a student may receive, ensuring that assistance is targeted where it is most needed based on individual financial circumstances.