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Financial Aid Terminology: No-Loan Policies, Demonstrated Need, and Percent Need-Met

This post is from a student, parent, or professional contributor. The opinions expressed by the author are their own and do not necessarily reflect the positions, viewpoints, or policies of Niche.

If you are just setting out on your college search journey, chances are you’re confused by new lingo and terminology that you aren’t sure how to navigate.

This is completely normal and understandable; you could not possibly be expected to be an expert right out of the gates!

However, you should familiarize yourself with the terms and understand how it will affect you. Here, I will discuss some financial aid terminology that you will likely come across and explain what it means and how you should be viewing it.

Demonstrated Need & Estimated Family Contribution

A common term you’ll come across no matter where you are planning to go for college is the phrase “demonstrated need.” It will likely dictate much of how much aid you’ll receive.

At its basis, demonstrated need refers to how much financial need your family seems to have based off of things like income, tax information, assets, and more. This seems simple enough, but it tends to vary depending on who is evaluating it.

For me, the FAFSA provided different answers to the question of my demonstrated need than my own university did, which also differed from other universities I applied to and from the CSS profile. Each of these different sources estimated that I could contribute different amounts. While they all were similar, some of the ranges made me anxious as I was not sure I could afford what would be asked of me if one source’s idea of my demonstrated need was used over another.

However, colleges will be thorough when evaluating this, so things ended up being a fair price. If you do not feel that your demonstrated need is an accurate portrayal of your family’s situation, there are ways to appeal your aid amounts and receive more funding.

An important note when discussing demonstrated need is that it will determine your estimated family contribution, or EFC. Your EFC is how much a college or other source of aid estimates that your family should have to pay based off of your demonstrated need.

When your FAFSA is processed, usually it will include an amount labeled “EFC” followed by a number to inform you of how much it seems like your family should be able to contribute based off of the information you have shared with them about your financial situation.

There are many other sources to find out what your EFC is, though. If you want to get an idea much sooner and not have to wait until after you fill out the FAFSA or receive aid information from each individual college, one good place to start is financial aid calculators. You can find tons of these online. Many schools offer them on their own website, so you can get a more nuanced idea from the university you are actually interested in.

Remember that these calculators are not 100% accurate, so you cannot expect to pay exactly what the aid calculators will tell you. Not only that, but as previously mentioned, the FAFSA’s evaluation is going to be different from your college’s, which will be different from any number of other sources that you look at.

No single source is going to be perfect, but with a combination, it can be helpful to get an approximation of what’s expected from your family in the coming years.

How To Negotiate Higher Financial Aid Offers

Percent Need-Met

This is another term that comes up frequently during the college search process and ties into your demonstrated need. Colleges will often have a “percentage need-met” to inform you of how much of your demonstrated need they’d be willing to aid you with.

As you may imagine, the higher this number is, the better! Schools that offer a generous amount of aid will have a higher percent need-met. Some colleges even meet 100% of demonstrated need. Examples of these include the Ivies and many private liberal arts schools.

In an attempt to make an education at their institution more accessible to lower income students, they offer a generous amount of aid to students with low-income backgrounds. This has allowed these schools to become more socioeconomically diverse in the past few decades.

However, if a college you are interested in does not meet 100% of need, this does not necessarily mean it will too expensive. Private schools and the Ivies are historically very expensive, so it makes sense they would have to offer much more aid than other universities.

Seeing percent need-met can still be a good indicator of how much aid you can expect to receive. Again, even if you are comparing schools with the same percent need-met, there will still be slight differences in their final cost. Need is evaluated differently on a case-by-case basis.

No-Loan Policies

This is a term more specific than the others. Having a no-loan policy means that a college will not include loans in their financial aid package to you.

This term does not vary like the others do; if a school says they have a no-loan policy, then you will not receive loans that must be paid back to the school in your aid package. Your aid will be grant-based.

Naturally, this is great news to find about a university you are thinking of attending. It does not mean that you will not have to take out loans, though. It refers specifically to the aid given by the college, which, of course, depends on your demonstrated need and the percent of need a college will meet.

If a college does not meet 100% of your need, or your EFC is higher than what you can comfortably be expected to pay, you may still have to take out loans from outside sources. Luckily, most no-loan policies occur in conjunction with 100% need-met policies, so with the combination of these two, it is possible you will have to do minimal searching for outside funding for your education.

To recap, having a no-loan policy simply means that the financial aid a college gives out up to an amount of student’s demonstrated need will not contain loans that must be paid back to the school.


These are just a few terms that colleges and other sites use to discuss the financial aspects of attendance. Knowing this terminology will help you get ahead and be more prepared during your college process, and you will be able to better understand what to expect from your colleges so you are aware of what is accessible to you.

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Author: Heidi Temple

I am a first-generation student at Princeton University. I am currently planning to concentrate in Molecular Biology there. Then, I plan to go to grad school and eventually pursue a career in medical research.