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:
- Federal Pell Grant
- Federal Supplemental Educational Opportunity Grant (FSEOG)
- Direct Subsidized Loan
- Federal Work-Study
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.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 11/1/2018. Variable interest rates may increase after consummation.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.94% – 12.78%1||Undergraduate, Graduate, and Parents|
|4.06% – 13.06%3||Undergraduate and Graduate|
|4.34% – 12.99%2||Undergraduate and Graduate|
|4.25% – 11.10%*,4||Undergraduate and Graduate|
|5.03% – 11.23%5||Undergraduate and Graduate|
|4.12% – 13.13%6||Undergraduate and Graduate|
|5.62% – 10.01%7||Undergraduate and Graduate|
|3.93% – 9.81%8||Undergraduate, Graduate, and Parents|
|4.26% – 12.13%9||Undergraduate, Graduate, and Parents|