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Important Things to Know About Your EFC

Financial aid can be confusing, especially when you'll still have out-of-pocket costs in the end. Here are 15 things to know about Expected Family Contribution.

In the fall of your senior year, your family will fill out the Free Application for Federal Student Aid (FAFSA) to start the process of receiving a federal and state aid package that will help you pay for college. When you fill out the FAFSA, it generates what’s called an Expected Family Contribution (EFC) in the Student Aid Report. Learning about your EFC can stir up a lot of confusion and misunderstanding—and it’s common for students and parents to stress more than necessary fearing what kind of money they’ll have to pay out of pocket once everything is said and done. But before you fret, here’s all the key things you need to know about EFC, how it works, and how it may affect your college costs.

What is EFC?

“If [a student’s] EFC is $5,000, they think they’re going to pay $5,000,” says Bob Falcon, president of College Funding Solutions and contributor to Road2College’s Pros Network. In actuality, you’re obligated to pay the amount the college charges you (minus any grants or scholarships), which could be more than your EFC. Or, if your EFC is higher than the cost of the college, you would pay cost of attendance minus any merit scholarships. Your EFC is simply the amount the FAFSA determines your family can afford to contribute.

How does EFC work?

To calculate need, the FAFSA uses a federal formula to analyze parent income and assets, student income and assets, family size, the age of the older parent, and the number of students in the family attending college simultaneously. Your demonstrated need hinges on the costs of your colleges.

Say your EFC is $24,000 (for one year). At a public university that costs $23,000, you have no need, according to the FAFSA formula. But at a private college that costs $71,000, you do have need ($71,000 – $24,000 = $47,000), and you could receive an institutional grant. Most colleges include other forms of help, such as federal loans. Sometimes they’ll offer a combination of need grants, merit scholarships, and loans. Keep in mind, colleges are bound by the EFC formula, and they can’t give more need-based aid just because your EFC is difficult to afford.

Related: 5 Common Myths About Financial Aid

When is the right time to calculate your EFC?

You can calculate your EFC before your senior year. Use a representative parent tax return for a realistic outcome. The College Board EFC calculator generates both federal and institutional EFCs. Just remember the institutional EFC can vary a bit from college to college. If your parents plan to make financial changes (Roth conversion, for example), it’s best to make changes before January of sophomore year, the “base year” used for your senior FAFSA.

Make sure when you calculate your EFC that you’re careful and pay attention to details. If your EFC is abnormally high, you might have made a mistake. Mistakes aren’t easily identified because most EFCs feel high, but if yours seems too high, check if you unintentionally included retirement assets like a 401K or IRA, Falcon suggests. Also double-check that you didn’t add an extra zero somewhere. This 2017–2018 EFC chart (income only) created by Troy Onink can help guide you. Be sure to adjust upward for assets.

When you qualify, how much aid do you get?

Financial aid can come from the federal government, your state, and the college itself. Some selective colleges are generous about meeting need, but most aren’t—this is called gapping. If you qualify for a full or partial federal Pell grant—the full amount is $6,195 for the 2019–2020 academic year—you’ll receive it. Pell grant eligibility is based on your EFC, not the cost of college. The 2019–2020 maximum EFC to qualify for any Pell grant money is $5,486. You might also qualify for a state grant. Check what your state offers. But colleges themselves aren’t obligated to offer institutional grants.

Federal aid includes the Pell grant, FSEOG grant, work-study (federal dollars that pay for designated campus jobs), and federal student loans—and this aid is limited. Because of the limitations, this type of aid is often first come, first served, which is why students are encouraged to file the FAFSA as soon as it opens on October 1 each year.

Related: Financial Aid Application Mistakes Can Cost You

Other important things to know about your EFC:

  • The EFC calculation is weighted heavily toward parent income: Parent income is tapped at up to eight times more than assets, Falcon says. For families earning up to $125,000, approximately 20% of their income gets calculated toward the EFC. For those earning between $125,000 and $200,000, it’s about 25%. Student income is assessed at 50%, but the first $6,660 (2019–2020) is protected.
  • Parent savings affect EFC less than you think: Many families believe they are penalized for having savings, but savings are calculated at up to 5.64%. That means on $10,000 in a savings account, approximately $564 is counted toward the EFC above the asset shield allowance, which is tied to the older parent’s age.
  • Siblings affect your EFC, but not how you think: If you have a sibling in college, the EFC is divided, not doubled. It’s not always equally in half because each student’s financial profile can differ, but it’s often close. Each student will still have their own EFC.
  • Your EFC doesn’t consider consumer debt:  Any kind of parent credit card debt, car payments, a high mortgage—these don’t get counted on the FAFSA. Colleges won’t compensate with a hefty financial aid package just because your parents have stiff expenses.
  • Your EFC can change every year: The EFC fluctuates with income and assets. Often, students’ summer earnings or part-time college jobs can bump up the EFC.
  • You can have more than one EFC: If you apply to College Scholarship Service (CSS) PROFILE colleges, you’ll fill out another financial aid form that colleges use to calculate institutional EFCs. The PROFILE doesn’t list an EFC like the FAFSA does because every PROFILE school calculates its own EFC for you with its own formula.
  • Divorce can be an advantage: On the FAFSA, only the custodial parent’s income is counted. If you live most of the time with a parent who has a lower income than the other parent, that’s the income assessed on the FAFSA. (The PROFILE, however, counts both incomes.)
  • The EFC affects financial aid even if your parents aren’t paying for college: You can’t qualify for more aid just because your parents want you to pay your own way. Parent income has been counted on financial aid forms for decades.
  • You can’t file as independent just to avoid the family EFC: Even if your parents won’t contribute, it’s difficult to be deemed independent for financial aid forms. For many students, turning 24 is the easiest way to achieve independence.

Related: How to Appeal Your College Financial Aid Package

Your Expected Family Contribution seems like a daunting factor of financial aid—even just based on the name. College costs are often one of the biggest struggles for students and families when it comes to the college journey, but by arming yourself with knowledge, you can navigate your financial aid plans with more confidence so that you can make your financial plans work for you in order to receive a great education.

To learn more about financial aid, check out The Financial Aid Handbook by Vedvik and Stack as well as Kal Chany’s Paying for College Without Going Broke.

Make your education more affordable—check out our Scholarship Search tool.

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