Do You Know What Your Expected Family Contribution Is?


Do you know what your Expected Family Contribution is?

If you don’t, you should make it a priority to obtain this number.

I’d argue that families need to know what their preliminary EFC is long before they begin looking at colleges. Unfortunately, most families don’t have a clue about what their EFC is until their children are seniors in high school and they’ve applied for financial aid.

Parents will receive their EFC figure immediately after completing the Free Application for Federal Student Aid (FAFSA) online, but as far as I’m concerned that’s too late.

What is an Expected Family Contribution?dollars clothese lines

Your EFC represents what a college will expect you to pay at a minimum for one year of a child’s college.

The EFC, which is expressed as a dollar figure, is calculated based on such factors as family income, taxable investment assets, college savings accounts, number of people in the household, marital status of the parents, number of students in college and, in some cases, home equity.

Low-income families can have an EFC as low as $0. That’s the automatic EFC of families making an adjusted gross income of less than $24,000.  An EFC of $0 means that the family has no ability to pay for college, but that rarely means they won’t have to pay something.

Families with low EFC’s will want to look at schools that give generous need-based financial aid packages.

In contrast, there is no EFC ceiling for wealthy students. The highest EFC that I have seen personally was $108,000 and the father in that household was a corporate executive. Families with high EFCs, who don’t want to pay full price, should look for schools that give merit scholarships to affluent families—and the vast majority of institutions do.

Flawed EFC Methodology

Plenty of families are shocked when they obtain their EFC. There are winners and losers.

Parents with a lot of debt can be can be among the losers. The federal EFC formula doesn’t consider household debt, so the EFC can be a fairly harsh assessment of a family’s ability to pay for college. The formula also doesn’t give a break to families who live on the coasts and other expensive areas.

In contrast, the federal methodology favors homeowners, aggressive retirement savers, small business owners and households of  divorce. The formula doesn’t inquire about retirement assets, a primary home and the net worth of a business with less than 100 full-time employees. Here is where you can see how the federal financial aid formula treats divorce.

A lot of experts have rightfully complained that the methodology used to generate EFC figures is flawed. It’s likely that the EFC won’t pinpoint what a family can truly afford for college. And it’s no wonder. Congress, rather than financial aid experts, mandates what’s in the EFC secret sauce.

All that said, the biggest factor determining an EFC is usually the family’s income.

What You Do With Your EFC

Why do you need to know what your EFC is?

You will get some idea of the costs that your family will face for one year of college and what kind of financial aid you might expect. But that figure alone won’t tell you anything until you look at the so-called cost of attedence of a particular school. Let’s look at an example:

School No. 1: Private College

  • Family EFC: $24,000
  • Cost of attendance: $52,000
  • Potential financial aid award: $28,000

School No. 2: State University

  • Family EFC: $24,000
  • Cost of attendance: $19,000
  • Potential financial aid award: $0

Financial Aid Realities

As a practical matter, the vast majority of schools will not meet 100% of a family’s need. Those that do are almost entirely elite private colleges and universities, such as Dartmouth, Penn, Williams and Princeton whose student bodies are predominantly rich.

In general, the students who capture the best financial aid packages are typically the ones whom a college or university covets. Teenagers will often get a better deal if they are in the top 25% to 33% of the latest crop of applicants.

Other factors that can boost awards include geographic diversity (a student from Nevada is going to be more attractive to an Ohio college than yet another kid from the Cleveland suburbs) talents, ethnicity (mostly a factor at elite schools), majors (students can be more attractive in less popular majors like philosophy or French), athletic ability, gender (woman are prized at engineering schools while men can sometimes get a break at liberal arts colleges) and being rich also is a big help.

To obtain a preliminary EFC, I’d suggest that you use the EFC calculator at the College Board’s website.

Learn More…

Answering a Dad’s Financial Aid Question

It’s Time For FAFSA Questions

What 66 Schools Would Cost This Family


Let's Connect

Leave a Reply

  1. Lynn,
    My son is a top student. 35 out of 36 on ACT, 5.6 weighted GPA. We are looking for Merit Aid. Can you let me know what schools have generous Merit Aid Programs? My EFC is 100%.

  2. Lynn,
    The EFC formula has evolved in the past few years to greatly reduce the asset protection allowance of parents. For example, the allowance for a 60-year old in 2011-2012 was $64,000 and only $45,500 for 2014-2015. That would amount to an increase of $2000 in EFC for many families. Do you know of any rationale for this? I thought the government was trying to make college more affordable, not less.

    1. Hi Tim,

      You are correct that the EFC asset protection allowance has been declining. You can blame that on rising Social Security benefits. The formula is tied to Social Security benefits. When benefits are rising, the government figures parents won’t need to save as much for college.

      Here is a great article from Troy Oinik that explains what’s going:

      Lynn O’Shaughnessy

  3. Lynn,

    Always a great topic to discuss – particularly with families when their students are still “pre-Junior year” in high school!

    The elephant in the room however, is how does a family pay their EFC? It’s great to look for money from scholarships and merit awards, but that doesn’t help a family reduce their EFC much (in most cases).

    It’s important for families to come up with an Affordability Review of their “EFC” – by which I mean they need to know what they can afford each year of college, before launching a college search.

    Good stuff!

    1. Lynn, this is a great overview of the EFC. I also agree with Todd’s comments. In my personal experience, the first thing I did when I got an estimated EFC was look at how much of that EFC we could actually afford to pay each year through college savings and cash flow. Then we went looking for schools that would potentially offer the most merit money to get the total school price down to near the EFC amount. We were lucky enough to find some schools that offered enough merit money to result in our net price being lower than what the FAFSA calculated as our EFC. From what I understand though, that is the best case scenario and as you said, a student needs to be in the top 25 – 33% of applicants to get that type of offer.

      For families that look at the EFC and determine they cannot afford to cover that amount each year, there are affordable options to investigate like in-state universities and community colleges (to lower the cost for two years). That’s why the sooner you have an estimate of what your EFC may be, the sooner you can target your kid’s college search to schools you may actually be able to afford.