Expected Family Contribution (EFC): All You Need to Know

By Eric Eng

By Eric Eng

College consultant taking to two people.

Expected Family Contribution (EFC): All You Need to Know

What is the Expected Family Contribution (EFC)?

Attending college is an essential step for many students, but the cost of attending college can be a major barrier. However, there are a variety of strategies that students and families can use to help make college more affordable. Colleges and universities offer financial aid options that come in many forms, including grants, scholarships, and student loans. The Expected Family Contribution (EFC) is an important figure that colleges and universities use to determine a student’s eligibility for need-based financial aid.

What is the Expected Family Contribution (EFC)? The Expected Family Contribution (EFC) measures a family’s financial strength and used by colleges and universities to determine a student’s eligibility for need-based financial aid.

The EFC is calculated based on the financial information from the Free Application for Federal Student Aid (FAFSA).

View of a student talking to a person wearing a suit.

The EFC is assessed through several factors, including the family’s income and assets, the number of family members in college, family size, and parents’ age. The EFC is calculated using a formula established by Congress, which considers both income and assets.

Income is the most significant factor in determining the EFC, and it includes all taxable income, such as wages, salaries, and investment income. Assets are also considered, including cash, savings, and investments. Retirement accounts, such as IRAs and 401(k)s, are not included in the calculation of assets.

Once the EFC is calculated, it is used by colleges and universities to determine a student’s eligibility for need-based financial aid. This aid can come through grants, scholarships, work-study programs, and loans.

It is essential to keep in mind that the Expected Family Contribution, or EFC, is not the same as the amount that a family will be expected to pay for college. Instead, it is used to determine the student’s financial need.

Colleges and universities will use the EFC to calculate the amount of financial aid a student can receive. The actual cost of attending a college or university will vary depending on several factors, including the school’s tuition and fees, the student’s residency status, and financial aid availability.

How Do You Calculate the Expected Family Contribution?

How do you calculate the Expected Family Contribution? The EFC is calculated using the financial information provided on the Free Application for Federal Student Aid (FAFSA). It is a form that students in the United States must fill out each year to apply for federal financial aid for college or career school.

The following factors are used to determine the Expected Family Contribution:

  • Income: The EFC formula considers the adjusted gross income (AGI) of the student and their family. This includes income from wages, salaries, and self-employment, as well as interest and dividends.
  • Assets: The EFC formula also takes into account assets owned by the student and their family. This includes cash, savings, investments, and real estate.
  • Family Size: The size of the student’s family is considered, including the number of dependents in college.
  • Age of Parents: The age of the older parent is factored into the EFC calculation.
  • Number of Family Members in College: The number of family members attending college at the same time is also taken into account.

The EFC calculation calculates both the parent and student contributions to college costs and then adds them together.

The formula will calculate your total financial resources and then subtract the minimum amount of money your family requires for living expenses each year. It is assumed that the remaining funds can be partly used for college expenses.

EFC Parent Contribution

  • Total annual parental income.
  • Use both taxable and nontaxable income, as well as any money put aside for retirement that year.
  • Subtract allowances for federal, state, and Social Security payments.
  • Subtract an Income Protection Allowance (IPA) from the total. The IPA is intended to represent the amount of money a family requires from its earnings for necessities (such as housing and food). It is determined by the size of your family and the number of children currently attending college.
  • Subtract an Employment Expense Allowance. This is only available in households where both parents work, and equivalent to 35% of earned income or $4,700, whichever is less. It is intended to cover expenses that all working parents face, such as lunch and transportation.

The figure you arrived at based on the calculations above is known as the Available Income (AI). AI is meant to represent how much of your income can be used to cover college expenses. You will be using this number later.

Available Income (AI)

  • Total the parent’s assets. Include all cash, bank accounts, net investments, and net real estate, but leave out your primary residence and retirement accounts.
  • Subtract an allowance for education savings and Asset Protection Allowance. This figure is intended to safeguard a portion of your assets that you have set aside for emergencies or college expenses.
  • Multiply the current total by 12%. This calculation protects most of your remaining assets for other purposes.

The calculated figure is called the Contribution from Assets.

Contribution from Assets

  • To calculate Parent Adjusted Available Income (AAI), add Available Income (AI) to Contribution from Assets.
  • Determine Parent Contribution from AAI. There is a table available to help determine the Parent Contribution. To give an illustration, if your AAI is $100,000, your Parent Contribution from AAI is $39,360. If there are two children in college at the same time, you will divide that figure in half.

The Parent Contribution is the result of this calculation.

EFC Student Contribution

  • Total annual student income. Use any income earned during the year, whether the student paid taxes on it.
  • Subtract federal and state allowances and Social Security payments.
  • Subtract Income Protection Allowance (IPA). This figure rises slightly each year. It is currently $7,600, which is a very generous figure. Many students do not earn more than this amount.
  • Determine the Student Contribution based on the Available Income. This figure is equal to half (50%) of your current total. Set aside that number for now.
  • Add up all the student assets including all cash, bank accounts, and net investments in your total.
  • Determine the Student Contribution from Assets. Take 20% of your current total asset value.
  • Calculate the Total Student Contribution. Add the Student Contribution from Available Income plus Student Contribution from Assets. The total is your Student Contribution.

To compute your Expected Family Contribution, your Parent Contribution must be added to your Student Contribution. Though it does not represent the exact amount you will pay for college expenses, colleges will assume you can contribute this amount when determining how much financial aid your family will receive.

What Is the Lowest EFC for Financial Aid?

While there is no specific minimum Expected Family Contribution required to qualify for financial aid, the lower the EFC, the higher the student’s eligibility for need-based financial aid. However, students and parents often wonder, “What is the lowest EFC for financial aid?”

Generally, an EFC of 0 is considered the lowest EFC for financial aid, indicating that the student’s family has no ability to contribute to the cost of attending college.

Young woman interviewing a student in a room.

Students with an EFC of 0 are generally eligible for the maximum amount of need-based financial aid available, including federal grants, work-study programs, and subsidized student loans. However, it is important to note that the actual amount of financial aid a student receives will depend on the cost of attending the college or university and the availability of financial aid funds.

Furthermore, families with an EFC above 0 are still eligible for some form of financial aid. The federal government, states, colleges, and universities all have their own criteria for determining financial need and eligibility for financial aid. Some colleges and universities offer merit-based aid, awarded based on academic or other achievements, regardless of financial need.

To maximize eligibility for financial aid, it is important for families to complete the FAFSA accurately and before the deadline. The FAFSA opens on October 1st of each year. Students seeking federal financial aid have until June 30 to submit the form, which is roughly a year and a half after the FAFSA opens.

What Happens if My EFC Is Too High?

What happens if my EFC is too high? There is no simple threshold for what is considered a high EFC because how your EFC affects financial aid will depend on the college’s Cost of Attendance (COA).

For example, an EFC of $15,000 would be reasonable for a student attending Harvard, which has a COA of more than $80,000, but it would be excessive compared to the cost of a local community college.

If your EFC is high, the federal government believes your family will be able to cover a larger portion of your higher education costs—especially if your EFC is greater than the cost of the college you are attending. In such cases, the government assumes your family can cover the entire cost of college.

Young woman talking to a group of people.

A high EFC may limit your eligibility for need-based financial aid, such as federal grants, work-study programs, and subsidized student loans. However, you may still be eligible for other forms of financial aid, such as unsubsidized student loans, scholarships, and merit-based aid.

Even with a high EFC, you should still complete the FAFSA.

Your EFC may be too high to qualify for need-based aid such as grants, but you may still be eligible for federal work-study or federal student and parent loans. To qualify for federal student loans and other types of financial aid, you must complete the FAFSA. Furthermore, many school-based scholarships, including merit-based aid, use information from the FAFSA to make awards.

Moreover, need-based government grants are not the only type of financial assistance available. Student aid also includes federal student loans and federal work-study programs. Furthermore, state and school programs are considered financial aid. The FAFSA is also required if parents want to use Parent PLUS loans to assist their children.

If there have been significant changes to your family’s financial situation since you submitted the FAFSA, you may be able to appeal your EFC. Some circumstances could include the following:

A Family Member’s Death

The death of a family member can be extremely difficult on a family in many ways. If a member of your immediate family has died, you should appeal your initial award.

Major Illness or Injury

A serious illness or disability can also devastate a family’s finances, not only because of lost income but also because of medical expenses. If you or someone in your family has suffered a major illness or injury that has impacted your ability to pay for school, you may be eligible for an appeal.

Loss of Employment or Income

If you or a member of your immediate family has lost your job, you should consider appealing your award. This includes obvious scenarios like layoffs or reduced work hours, as well as job loss due to incarceration or retirement. This can also include the end of an income stream, such as rental income, alimony, or a court settlement.

Separation or Divorce

Dependent children of divorced parents must include only the financial information of the parent with whom they live, whereas married parents must include both incomes.

If your parents have recently divorced or are living separately, your school may be willing to recalculate your award based solely on your updated income and household size if you file an appeal.

The financial aid office is bound by the FAFSA terms regarding which specific tax documents you must submit; however, through the appeal process, they can also use their expert discretion to provide additional aid to students whose families’ circumstances have had significant changes.

Begin by contacting your financial aid advisor, who will be able to guide you through the next steps. Although receiving additional aid is not guaranteed, your school should be able to accommodate your new circumstances.

Why Is Your EFC Important?

Why is your EFC important? Simply put, your Expected Family Contribution (EFC) is important because it determines the amount of financial aid you are eligible to receive and can have a significant impact on your ability to afford college. Let’s discuss why your EFC is important and how it is used in the financial aid process.

Determines Eligibility for Need-Based Financial Aid

Your EFC is used by colleges and universities to determine your eligibility for need-based financial aid, such as federal grants, work-study programs, and subsidized student loans. Need-based financial aid is awarded to students who demonstrate financial need, as determined by their EFC. Generally, the lower your EFC, the higher your eligibility for need-based financial aid.

Helps Colleges and Universities Determine Aid Packages

Colleges and universities use your EFC to determine your financial need and to create a financial aid package that meets that need. Your financial aid package may include a combination of need-based and non-need-based aid, such as grants, scholarships, loans, and work-study programs. The financial aid package may vary depending on the cost of attendance and the availability of financial aid funds.

Used to Allocate Limited Financial Aid Funds

Financial aid funds are limited, and colleges and universities use your EFC to allocate these funds to students who demonstrate the greatest financial need. Students with a lower EFC are typically given priority for need-based financial aid, as they have a greater need for financial assistance.

Impacts Your Ability to Afford College

Your EFC can have a significant impact on your ability to afford college. If your EFC is low, you may be eligible for more need-based financial aid, making college more affordable. However, if your EFC is high, you may not be eligible for enough need-based financial aid to cover the cost of attendance, making college more difficult to afford.

Female student holding her books while smiling for the camera.

In conclusion, your EFC is an important factor in the financial aid process and can have a significant impact on your ability to afford college. It is important to understand your EFC and to take steps to maximize your eligibility for financial aid to ensure you can achieve your educational goals.

Attending college can be a significant investment, but it’s also a valuable opportunity to gain knowledge and skills that can benefit you for years to come. By exploring financial aid options, completing the FAFSA, calculating your Expected Family Contribution, looking for scholarships, working while in school, and taking advantage of cost-saving strategies, you can make college more affordable and achieve your educational goals.

While attending college is a challenging decision to make, the college admissions process also presents more challenges as you reach your goals. As the admissions process has become more competitive, students must step up. College admissions experts are also available to guide students through this tough process. AdmissionSight, one of the U.S.’s leading college admissions consulting companies, is ready and willing to work with you.

Book an appointment for an initial consultation with AdmissionSight experts to learn more about college admissions strategies.



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