What Is EFC And How Is It Related To Federal Student Aid?
EFC, short for Expected Family Contribution, is the index number used by college financial aid workers to decide how much financial assistance you would be entitled to receive if you were to attend the school. The information required in the formula is obtained from the Free Application for Federal Student Aid (FAFSA).
To calculate the figure, the applicant’s taxed income, untaxed income, benefits, and assets are taken into consideration. Let’s delve deeper into what EFC scores are and how they impact your eligibility.
How Does An EFC Work?
As mentioned, this is the number determined according to your FAFSA form. It measures the financial strength of a family and is calculated as per the formula established by the law.
To clarify, the number doesn’t represent the amount of money your family will need to pay for college. Nor does it mean the amount of federal aid you’ll receive. Instead, it’s merely a starting point used by grant providers and the financial aid issuers to calculate the amount of support a student should receive.
Moreover, it helps determine eligibility for various grants and need-based federal aid, including Federal Pell Grants and Federal Supplemental Education Opportunity Grants.
How Your Financial Need Is Calculated
The data used to measure EFC is extracted from the information provided by students on their FAFSA form. Generally, the lower the number, the greater the financial need, thereby increasing the eligibility for federally funded financial aid programs.
The taxable and untaxed income, assets, and benefits of your family, such as unemployment or Social Security benefits, will be included in the formula. Additionally, your family size and the number of family members who attend college or career school during the same year are also taken into account.
Bear in mind that the calculation of financial need shown may vary significantly between colleges. This is because each college has its policy about how to assess the eligibility of its private funds. Therefore, your final offer for financial assistance might be higher or lower than you may have estimated.
You can get an estimate of your financial need by subtracting the EFC from your school’s cost of attendance (COA). Your COA is the total of tuition and fees, costs of room and board, books, supplies, loan fees, miscellaneous expenses, child or dependent care costs, disability costs, and costs for study-abroad programs.
For instance, let’s say your COA is $20,000 and your EFC is $14,000. In this case, you’ll be eligible for no more than $6,000 ($20,000 -$14,000) in need-based aid.
Why Your EFC Matters
It’s the primary determiner of your eligibility to receive federally funded need-based aid. Accordingly, it’s imperative to enter the correct information while filing your FAFSA.
Likewise, it’s equally important to update your details if there are any changes in your financial status.
This number also helps the federal government and college authorities determine your eligibility for federal grants and federal student loans.
If you don’t fill out the FAFSA form, authorities can’t determine your EFC, and you won’t be eligible for any need-based aid programs offered by the government.
The Bottom Line
EFC amounts differ depending on the college you’re applying to. With the right amount of funding, you’ll be able to graduate with lower debt.
Therefore, make sure to file your FAFSA so you can gain a more precise estimate of the financial aid you’ll be eligible to receive.
