What is the equation to calculate financial need?

The correct approach to calculating financial need involves assessing the total cost that a student will incur to attend an educational institution and subtracting the expected financial resources available to them. The foundational equation to derive financial need is to take the Cost of Attendance and subtract the Student Aid Index, which represents the calculated expected family contribution toward the student’s education expenses.

In this context, financial need is defined as the gap between what a student can contribute (as determined by the Student Aid Index) and the total expenses of attending the institution (Cost of Attendance). This measure is crucial for determining eligibility for various forms of financial aid, ensuring that students receive the support they need based on their financial circumstances.

Understanding this equation is essential, as it outlines the framework through which financial aid programs assess eligibility and distribute resources effectively.