I will never forget the moment we received our Student Aid Report and I saw the EFC (Expected Family Contribution) on the right-hand corner. I was in shock as most parents are. How could the powers that be believe we could afford to pay that amount for college? It was a mystery to me how they came up with that number, as it is to most of you.
The EFC determines how much financial aid the colleges will award to your student. You can’t receive any federal or institutional aid without getting an EFC when you complete the FAFSA. We are stuck with it and will probably never truly understand how they use to determine how much money your family can afford to pay.
If you are going to need financial aid for college (and who doesn’t?), you will need to understand the EFC.
Get your EFC early.
As early as freshman year of high school it’s a good idea to get a preliminary EFC. Obtaining a preliminary EFC will give you a rough idea of the minimum amount that they would be expected to pay for college.
Parents can obtain their EFC by using the College Board’s EFC Calculator using figures from your income tax return and your latest non-retirement investment account statements including checking and savings accounts and any accounts and income that your child has.
The calculator will produce an EFC using the federal methodology that is linked to the Free Application for Federal Student Aid.
If your financial situation changes, put the new numbers in the EFC calculator.
Plug new numbers into the EFC calculator if a family’s financial situation changes at any time due to such things as a divorce, separation, death, disability, job loss or the care of an elderly parent.
Higher income families will have a higher EFC.
Families with household incomes above $80,000 typically find that they do not qualify for need-based aid at state universities, but they may qualify for need-based aid at private schools.
Determining if a student would be eligible for need-based aid requires subtracting the EFC from a school’s cost of attendance which can be found on their website or using College Navigator.
Families with high EFCs should look for schools with merit scholarships.
Families, who discover that they have a high EFC and aren’t eligible for need-based financial aid, should look for schools that provide merit scholarships that are given regardless of need. Even though you won’t qualify for need-based aid, you will still need to complete the FAFSA because colleges award merit scholarships and grants based on the information they receive from your FAFSA.
Families with modest EFCs have options.
If an EFC is modest, families should search for schools that provide excellent need-based assistance. State colleges and universities are also an option since their tuition and fees are often affordable. However, many private colleges offer generous merit-based aid to students who are at the top of their applicant pool.
Families usually pay more for college than the EFC.
Families will usually have to pay more for college than their EFC indicates they can afford because most schools do not meet 100% of a student’s demonstrated financial need. Consequently, it’s important to identify the most generous colleges that would consider a child an attractive candidate and ignore the ones that gap your student (do not meet all of your financial need).
You get your official EFC after completing the FAFSA.
After completing the FAFSA, a student will receive their official EFC via an electronic document called the Student Aid Report. The SAR will include the family’s EFC near the top of the report and also provide all the information that the family included on the FAFSA. Parents should check for accuracy.
The SAR does not put a dollar sign in front of a family’s EFC figure. In the sample provided, the family’s EFC is $0, but what you see is a string of zeros.
Here is a link to a sample SAR.
Your EFC will determine how good your financial aid award is.
Unfortunately, many schools don’t include a family’s EFC on their financial aid awards. If you don’t see the EFC on the award, you can look at your SAR and use it to determine whether the award is sufficient for your student to attend their college. Once you have your EFC and the financial aid package, compare the EFC with what a school is offering.
Let’s say that the cost of a school after deducting grants and scholarships is $30,000 and the EFC is $20,000. That means there is an $10,000 gap between what the EFC suggests that a family can pay and what the school wants to charge you. Based on this knowledge, a family can appeal the award.
Do not hesitate to appeal an underwhelming award. Many schools that need to hustle to fill their freshmen class every year will often be open to requests for more money. Of course, if your financial (situation worsens, such as loss of a job or high medical bills, you should also appeal at any school.
In October 2022 the EFC gets a new name (SAI).
For the 2023-2024 school year, the federal government will replace the EFC with the term Student Aid Index (SAI). Families will be filling this out beginning Oct. 1, 2022.
The SAI will still be a dollar figure, but the formula the federal government uses will change. With the change, the PELL Grants, for low-income students, will have two different formulas based on Adjusted Gross Income and Poverty Line. The FAFSA confirmation page will immediately tell the student if they quality for a PELL Grant.
Knowledge is power.
Now that you know what the EFC (or soon to be SAI) is, you can better prepare your family to get ready for the high cost of college. Knowing your EFC allows you to plan ahead and not be surprised when you complete the FAFSA and receive your Student Aid Report.
Do you have questions about the EFC or the FAFSA? Learn everything you need to know about applying for college by getting my Parent Crash Course.