Why the ‘Expected Family Contribution’ Is Key to Your Financial Aid Award

expected family contribution

To understand what the phrase Expected Family Contribution (EFC) means, it helps to first understand what it doesn’t mean.

Your EFC is not how much your family must pay out of pocket for your college education. It is what your school — taking into account your family’s finances — thinks you could cover.

This is why your Expected Family Contribution is so important. It ultimately plays a pivotal role in determining how much financial aid you can get from the federal government.

Your Expected Family Contribution is a dollar figure

The Expected Family Contribution is just that — how much you and your parents (in most cases) can conceivably afford to put toward the cost of your education. It is one of four factors used by your school to determine how much need-based aid you can receive:

  • Expected Family Contribution
  • Enrollment status
  • Year in school
  • Cost of attendance

Your Expected Family Contribution is used by schools to estimate how much need-based aid (such as grants, loans, and work-study) you can collect.

Conversely, your EFC is not used to determine how much other financing options (such as Unsubsidized Direct or Parent PLUS Loans) you can claim.

A low EFC means you may be eligible for a larger financial aid package. A higher EFC means you may have to rely on unsubsidized loans to fill your tuition shortfall.

When it’s put on paper, your estimated Expected Family Contribution is a simple dollar figure. For some borrowers, it will be as little as $0. For others, as much as the full cost of attendance.

Behind the scenes, that figure is an indexed number based on a complicated formula.

How Expected Family Contribution is calculated

Your Expected Family Contribution comes from your Free Application for Federal Student Aid (FAFSA), which is the first step in financing your education.

What you report about your family’s income, for example, has a direct effect on the EFC that ends up on your college award letter. (You have the opportunity to make corrections or updates when you receive your Student Aid Report from the federal government.)

Your independent or family income is just one aspect affecting your EFC. The others are:

  • Assets, such as your home
  • Benefits, such as unemployment or Social Security
  • Family size, plus the number of relatives attending school simultaneously

A student coming from a family that owns a home, for example, may be on the hook for a higher EFC than one with a single mom renting an apartment.

But if that first student has three siblings also in college, his EFC will also reflect that.

These factors were used in the Department of Education’s (DOE) formula for calculating EFCs for the 2017-2018 school year. The DOE releases a detailed breakdown of this formula annually.

Some big pieces of financial information, such as credit card debt and student loans, are not included.

To get a better sense of your own EFC, you first need to know what kind of applicant you are.

How to estimate your Expected Family Contribution

Within the DOE’s 36-page explanation of how Expected Family Contribution is calculated, there are worksheets for three different types of federal aid applicants:

  • Dependent students
  • Independent students with a spouse and no other dependents
  • Independent students with dependents other than a spouse

There is a standard and simplified formula for each applicant.

For example, a dependent student whose family uses Supplemental Nutrition Assistance Program (SNAP) benefits and wasn’t required to file an income tax return would qualify for the simplified formula. This applicant wouldn’t have to enter as much financial information to see their EFC.

A dependent student coming from a family home that earns less than $25,000 in income may be eligible for a zero-dollar EFC. This means the federal government and the student’s chosen school wouldn’t expect them to pitch in so much as a dime for tuition, books, and other education costs.

To find your estimated Expected Family Contribution, select the worksheet that fits your family’s financial situation. If you prefer to be guided through the worksheet process, consult an online calculator like one of the following:

One benefit of using these calculators is that you can plug your information into both the federal formula and a separate methodology that private schools use to disperse grants.

No matter how you estimate your Expected Family Contribution, you will need the same information at your side. Your most recent tax return will be helpful.

Examples of necessary data include income figures as specific as untaxed Social Security benefits; allowances like medical and dental expenses; and assets such as cash held in checking and savings accounts.

To avoid any mathematical mistakes in your estimation, make sure you’re using the same financial information you entered on your FAFSA. You’ll also want to make sure to round to the nearest whole number, as this is the practice of the federal government.

Estimating now may lead to an appeal later

After filling out the DOE worksheet that applies to your family’s financial situation, the EFC assigned to you in your college award letters shouldn’t come as a surprise.

But it’s possible you will experience some real-life surprises after filing your FAFSA. Your Expected Family Contribution of $10,000 could shrink to $5,000, for example, if your breadwinner father or mother suddenly loses a job or falls ill.

For students in unfortunate scenarios like that one, there is an appeals process called professional judgment. (See Student Loan Hero’s coverage of the four steps for negotiating a better financial aid package.)

It’s important to discuss any questions and concerns with your school’s financial aid office as soon as a problem comes to light. The representatives there should be able to help you secure as much federal aid as possible, no matter your initial EFC.

Why the Expected Family Contribution is so important

There is a simple math equation to understand the importance of the Expected Family Contribution (EFC). Simply subtract it from your school’s cost of attendance (COA):

COA — EFC = The amount of financial aid you need

Your financial need can be covered by a variety of sources, including gift aid like scholarships and grants.

When that avenue has been exhausted, the EFC helps the federal government and your school decide how much need-based federal aid you can receive. (The remaining balance could be filled in by private loans, one of the several solutions if you’ve hit your federal loan limit.)

Be aware that your need-based aid allotment can’t exceed your cost of attendance. If your COA is $10,000, for example, and your EFC is $5,000, you can’t receive more than $5,000 in need-based aid.

Common forms of federal need-based aid include:

Need-based loans are generally preferable to other loans. The Direct Subsidized Loan, for example, is a more cost-effective alternative to the Direct Unsubsidized Loan because the government will pick up the tab on accruing interest while you’re enrolled.

The maximum allowance for each federal loan type (or grant or work-study opportunity) varies depending upon your class year and whether you’re an independent or dependent student. The maximum you as an individual can claim is listed on each college award letter you receive from schools to which you have been accepted or are already enrolled.

But again, don’t be afraid to challenge what you’ve been awarded if the amount falls below the federally mandated maximum. Your school may have room in their budget to max you out.

Know what you and your family can contribute

The federal government’s one-size-fits-all approach to the Expected Family Contribution is bound to cause hiccups for some borrowers. A formula taking just numbers into account can’t, in fact, account for a student whose circumstances have suddenly changed.

So look at your EFC as a guideline. Use online worksheets and calculators to estimate it in advance. Understand how much you can expect to put toward the cost of attendance.

Only then can you begin to get a handle on your actual family contribution.

If it becomes clear that some of your tuition will be left uncovered, be sure to learn about every student loan option.

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