Expected family contribution (EFC) is a calculation based on information provided on the Free Application for Federal Student Aid (FAFSA®) to estimate how much a student and their family are able to pay out of pocket towards college expenses. The resulting figure is used by colleges and the government to determine how much need-based financial aid students qualify for.
EFC meaning is sometimes mistaken as the dollar amount that a student and their family will pay for college. However, the amount families end up paying could be significantly more or less than the EFC depending on the cost of attendance and scholarships.
Here’s what aspiring college students need to know about EFC and how it affects their potential aid.
Expected Family Contribution as Part of the Picture
The expected family contribution is an estimate of how much money a family can contribute toward a student’s college education.
It’s a vital metric used to determine how much—if any—federal financial aid students will receive to help them pay for college.
Eligibility for federal aid also takes into account a student’s year in school, enrollment status, and the cost of attendance at the school the student will be attending.
How a College Uses the Information
Once the FAFSA® is completed, a college financial aid staff will use all the information to determine the applicant’s financial need.
It’s important to note that the EFC is an estimate of a family’s financial standing, not an exact number. The amount a family ultimately pays for a child’s college education could be significantly below or above the number provided.
Here’s the process:
1. The college financial aid staffers decide your cost of attendance (which includes tuition, fees, room and board, and books) at that school.
2. They then consider your EFC.
3. They subtract your EFC from your cost of attendance to determine how much need-based aid you can get.
Your offer of financial aid may change from year to year.
How Your EFC Is Calculated
There are two main options for calculating EFC depending on which schools you apply to. The federal methodology utilizes financial information from the FAFSA to quantify an applicant’s EFC. Meanwhile, a growing list of colleges uses the College Board’s College Scholarship Service (CSS) profile in addition to FAFSA to assess what students and families can afford to pay.
Calculating EFC With FAFSA
This methodology to calculate EFC was established by the Higher Education Act of 1965. However, the formulas are adjusted every year to account for inflation.
Filling out the FAFSA provides the information needed to calculate the EFC. This includes taxed and untaxed income, investments, assets, benefits, household size, and enrollment status of family members.
If you’ve already completed the FAFSA, your EFC will be listed in the top right corner of the Student Aid Report, which outlines financial aid eligibility. Students can have their EFC recalculated on an annual basis by submitting the FAFSA each year they’re enrolled in college.
You can calculate EFC in advance to get an idea of how much federal financial aid you can expect. First, figuring out your dependency status will help determine what financial information is needed and which of the following EFC formulas apply to you.
• Formula A: Dependent students
• Formula B: Independent students without dependents other than a spouse
• Formula C: Independent students with dependents other than a spouse (e.g., children)
The worksheet for these formulas is updated each year, and the 2020-2021 EFC formula worksheet is available online.
A dependent student is considered to have support from parents or guardians, so their parent’s financial information is included with the applicant in the EFC calculation. Whereas, independent students only provide individual financial information, or, if married, for their spouse as well.
Before completing the corresponding formula worksheet, there are some scenarios that can call for revising the EFC calculation.
If students or their families meet certain criteria, they can calculate EFC with simplified formula worksheets that exclude assets. For the 2021-2022 academic year, students who receive benefits from federal programs, such as the Supplemental Nutritional Assistance Program (SNAP), and report combined 2019 income of $49,999 or less can use the simplified formula. Having status as a dislocated worker and other tax information can substitute for the federal benefits requirement.
Students and families may receive an automatic zero EFC calculation if they meet lower income requirements. For the 2021-2022 academic year, the income threshold is $27,000 for parents of dependent students and independent students, and their spouses. Take note that independent students without dependents besides their spouse can’t qualify for an automatic zero EFC.
Calculating EFC With the CSS Profile
Around 200 colleges require students to provide supplemental financial information through the College Scholarship Service Profile. The 2021-2022 list of participating institutions is available online.
Colleges may customize their questions on the CSS Profile to capture more information to evaluate a student’s financial need. For instance, the CSS Profile may ask about home value and financial information from both households if a student’s parents are separated. The CSS Profile may also consider the regional cost of living and personal circumstances in its calculation of financial need.
While completing the CSS Profile in addition to FAFSA adds work to the college application process, it’s also an opportunity to qualify for institution-level financial aid.
How EFC Affects Your Financial Aid Package
EFC is one of several factors that affect your financial aid eligibility. Additionally, enrollment status, your year in school, and a given school’s cost of attendance will influence the type and amount of financial aid you can receive.
Schools calculate financial need by subtracting EFC from the cost of attendance, as demonstrated by the following formula:
Financial Need = (Cost of Attendance) – (Expected Family Contribution)
The cost of attendance is an estimate of the overall cost for the academic year, and thus, accounts for tuition, living expenses, books and supplies, and miscellaneous costs. If the cost of attendance exceeds the expected family contribution, you may qualify for need-based financial aid.
Federal Need-Based Aid Available for Qualifying Students
Depending on other eligibility criteria, a financial aid package could include the following need-based federal student aid programs:
• Federal Pell Grant: Student eligibility is determined by financial need and the funding amount can fluctuate each year. For the 2021-2022 academic year, the maximum award is $6,495 and students with an EFC of 5846 or less may qualify for a Pell Grant.
• Federal Supplemental Educational Opportunity Grant (FSEOG): Participating schools receive a set amount of federal funding that is distributed to students based on financial need each year. Eligible students can receive between $100 and $4,000 a year based on funding availability and their overall financial aid package.
• Direct Subsidized Loans: Undergraduate students with financial need may qualify for subsidized loans—a type of federal student loan that does not require interest payments as long as students study at least half-time. Students also receive a six-month grace period on interest payments after graduation and may qualify for a deferment based on income, health, continuing education, military service, and other factors.
• Federal Work-Study: This program provides part-time employment for undergraduate and graduate students with financial needs at participating schools. The total work-study award depends on the level of need, the timing of application, and a school’s available funding.
Fill Out the FAFSA® Early?
A student may qualify for a specific amount of need-based aid but may not receive all of it. That’s because the amount a student receives depends on the available funding at their school.
Colleges are not required to meet 100% of a student’s financial need, and some programs like the Pell Grant have limited funds that are divided up among schools each year.
Students may want to consider filling out the FAFSA® as soon as possible to ensure they are first in line to receive available aid.
Why Knowing Your EFC Is Important
Being aware of your EFC in advance can help prepare financially and strategically plan for college. Since EFC is recalculated every year, families can map out how various financial decisions will impact EFC.
Besides need-based financial aid, EFC can inform what types of non-need-based aid are available for higher-income families.
While families with low EFCs can expect to receive more need-based financial aid, the total amount offered will vary by school. Knowing your EFC early on can allow plenty of time to research which schools offer considerable aid.
If you have a high EFC, honing your search on schools where you’re competing for merit-based scholarships could potentially help make college more affordable.
Looking Ahead: Student Aid Index
Starting in 2023, the EFC will be replaced with the Student Aid Index (SAI). The change from EFC to SAI was part of the FAFSA Simplification Act, which passed in December of 2020 as part of the Consolidated Appropriations Act, 2021.
The SAI makes some changes in how the estimated aid is determined, including:
• Removing the number of family members in college as a determining factor.
• Establishing a new minimum SAI (from $0 for EFC to -$1,500), to help students cover costs that may not be included in a university’s tuition.
• Creating separate eligibility criteria to qualify for Federal Pell Grants.
However, the SAI will not come into effect until July 1, 2023. Until then, EFC will be used to help determine financial aid awards.
Bridging the Financial Gaps
Calculating your expected family contribution (EFC) is an important step for evaluating the cost of higher education. However, colleges are not required to meet 100% of a student’s financial needs.
To fill the gap, students can apply for scholarships and grants or take out student loans. If federal sources of aid, including federal student loans, aren’t enough to cover college costs, students may consider borrowing private student loans or look into refinancing your student loans.
Private student loans lack the borrower protections offered by federal loans, so are generally borrowed after all other sources of aid have been exhausted. Students interested in borrowing private student loans may want to consider shopping around so they can find a loan with the best rate and terms for their personal situation. SoFi offers private student loan options for undergrads, graduate students, and parents.
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