34 CFR § 692.41 - What standards may a State use to determine substantial financial need?
(a) A State determines whether a student has substantial financial need on the basis of criteria it establishes that are approved by the Secretary. A State may define substantial financial need in terms of family income, expected family contribution, and relative need as measured by the difference between the student's cost of attendance and the resources available to meet that cost. To determine substantial need, the State may use -
(1) A system for determining a student's financial need under part F of title IV of the HEA;
(2) The State's own needs analysis system if approved by the Secretary; or
(3) A combination of these systems, if approved by the Secretary.
(b) The Secretary generally approves a need-analysis system under paragraph (a) (2) or (3) of this section only if the need-analysis system applies the term “independent student” as defined under section 480(d) of the HEA. However, for good cause shown, the Secretary may approve, on a case-by-case basis, a State's need analysis system that uses a definition for “independent student” that varies from that term as defined in section 480(d) of the HEA.
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