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What Your EFC Is — and Why It Matters

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As you enter college, you know you’ll learn a lot — but you might not expect the crash-course in finances that many students receive. Unless you’re lucky enough to have your parents handle all the money details, you’ll need to learn all about financial aid, costs of attendance, student loans, and more. 


You’ve probably heard of the FAFSA — or Free Application for Federal Student Aid — that college students must fill out annually to be eligible for federal student loans and other aid. But one of the most important results of this application is your expected family contribution, or EFC. 


Read on to see how your EFC is used and what makes this number so important.


What Is Your EFC? 

Your expected family contribution, or EFC, represents how much the federal government thinks your family can reasonably afford to pay annually for your college education. 


Your EFC is calculated based on the personal info your family includes on the FAFSA, such as your parents’ income, financial assets, the size of your household, and how many members of your family are also enrolled in college. Your EFC will be a dollar amount, and generally speaking, students from low-income families will have a lower EFC than a student from a family with more assets. 


After your EFC is calculated, this number will determine the financial aid you’re eligible for. Your EFC will be subtracted from the school’s cost of attendance (COA), and the remaining amount is your family’s financial need. Your EFC determines whether or not you qualify for need-based aid such as federal Pell Grants, Subsidized Loans, and Work-Study programs. 


For example, say your school’s COA is $15,000 annually and your EFC is $8,000. After your family’s expected contributions of $8,000 are subtracted from the COA, you could be eligible for $7,000 in need-based financial aid to cover the remaining costs. 


It’s important to note that your EFC is simply a starting point and doesn’t guarantee how much your family will pay for school. Different schools may offer more attractive financial aid offers, and you could also apply for scholarships or other types of merit-based through private institutions.


How Is Your EFC Calculated? 

The formula to calculate a student’s EFC is established by law and uses the information you input into the most recent FAFSA you filed. 


The exact formula used to calculate EFC depends on a student’s family situation. There are different formulas for dependent students, independent students, and independent students who are supporting their own dependents. There are also simplified versions of each of these formulas — if your family has an income of less than $49,000 and you meet other factors, your EFC could be calculated with a simplified formula. Some students may even qualify for an automatic zero EFC in certain scenarios.  


The U.S. Department of Education has several worksheets to help students estimate their EFC on their own. Read the directions carefully to make sure you use the correct formula for your situation. There are also several online EFC calculators, such as this one from CollegeBoard, which may be easier to use. But remember, these sources provide estimates of your EFC — you won’t know the true number until you receive your finalized Student Aid Report.


What If I Think My EFC Is Too High? 

The higher your EFC, the more your family is expected to pay for college — so you might be disappointed to see your EFC is greater than you think it should be. 


If this happens to you, review your FAFSA for these common errors:

  • Assets: Make sure you’re not including assets you aren’t required to disclose. Things like saving and checking accounts, businesses, investments, and secondary homes should be included. However, your parents’ primary home, retirement accounts, and life insurance policies are generally not required. If you include unnecessary assets, you could be artificially inflating your EFC.
  • Income: The FAFSA usually depends on previous years’ income taxes to determine your family’s income. However, these documents may not be accurate by the time you attend college. If your parent lost a job or took a significant pay cut recently, financial aid administrators should be made aware of that fact. 
  • Household size: The FAFSA defines household size as your parent(s) and the number of dependents that receive more than half of their financial support from your parents — even if those dependents don’t actually live in your home. So if you have step- or half-siblings, for example, that meet these requirements, make sure they have been included in your household size. Unborn children may also be counted, so long as they will be born during the award year. 

If you made a mistake on your original application, see if you can update your FAFSA online. If your financial situation has changed drastically — such as a recent job loss or the death of a parent — you can gather supplementary documentation and make a formal appeal


Why It’s So Important to Know Your EFC

Your EFC can have a big effect on the amount of financial aid you’re eligible for, so it’s important to enter accurate information on the FAFSA — and update financial aid administrators if that info has changed. Doing so could majorly lower the total cost of your college degree. 


4 Key Takeaways

  • Your expected family contribution, or EFC, represents how much the government thinks your family can reasonably afford to pay for school.
  • Your family’s income, assets, and household size all affect your EFC.
  • Generally, the more income and assets your family has, the higher your EFC will be. 
  • Your EFC does not guarantee what you will pay for college — some schools will offer more attractive financial aid offers than others.

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