This lesson summarizes the key take-away points regarding Expected Family Contributions. This lesson can also be downloaded via your resource guide, EFC Primer: What You Need to Know About Expected Family Contributions.
1. An Expected Family Contribution is a dollar figure that represents what financial aid formulas believe you should be able to pay for one year of a child’s college education.
Families with adjusted gross incomes of $25,000 or less have an automatic EFC of $0. The EFC for the average American household with an AGI of $54,000 will usually range from $2,000 to $4,000.
There is no cap on EFCs so some very wealthy families will have EFCs that exceed the cost of an expensive private university.
2. It’s best to get a ballpark idea of what your Expected Family Contribution will be as early as your child’s freshman year in high school. Obtaining a preliminary EFC will give you a rough idea of the minimum amount that you will be expected to pay for college.
3. Before you assume that you won’t qualify for financial aid, obtain your EFC. Families with household incomes of $60,000 to $80,000 and above often find that they do not qualify for need-based aid at state universities, but they may qualify for need-based aid at private schools.
4. If you discover that you have a high EFC and you aren’t eligible for need-based financial aid, you can look for schools that provide merit scholarships that are given regardless of need.
5. If your EFC is modest, you should search for schools that provide excellent need-based assistance and also apply to public universities/colleges in your state.
6. Families will often have to pay more for college than their EFC indicates they can afford because most schools do not meet 100% of a student’s demonstrated financial need. Consequently, it’s important to identify the most generous schools that would consider your child an attractive candidate. You’ll learn how to use online tools to evaluate the generosity of schools in the module entitled, Tools to Find Generous Schools.
7. You can obtain your Expected Family Contribution by using the College Board’s EFC calculator. With this calculator, you’ll want to obtain your EFC using the federal and institutional formulas. Since the College Board is the creator of the institutional methodology, it’s best to use this calculator.
8. The EFC you obtain from the federal methodology (it’s generated by the FAFSA) will often be different than the one you obtain using the institutional methodology (it’s generated by the CSS/Financial Aid PROFILE) because the underlying formulas are different. The vast majority of private and public colleges and universities only use the FAFSA while 229 mostly private, selective schools use the PROFILE.
10. If you need to file the PROFILE, you will not receive your EFC from the College Board, which owns and operates this financial aid application. Institutions that use the PROFILE can customize their aid applications by choosing from hundreds of different questions so you will end up with a different EFC for each school. You should ask each PROFILE school for your EFC if the institutions do not include this important dollar figure on your financial aid awards.
11. Many schools do not include a family’s EFC on their financial aid awards. Some institutions make the dubious excuse that including the EFC on their aid letters will confuse families. More likely, schools don’t want to share EFC figures with families because parents could then determine if the aid package is stingy.
12. Once you have your EFC and the financial aid package, compare your EFC with what a school is offering. Let’s say that the cost of a school after deducting institutional grants is $39,000 and your EFC is $28,000. That means there is an $11,000 gap between what your EFC suggests that you can pay and what the school wants to charge you.
You can appeal based on this funding gap. Whether you are successful will depend in part on the inherent generosity (or lack of generosity) of a school and how much the institution wants your child.
13. Your EFC probably won’t be a true indicator of what you can afford to pay for college. The FAFSA formula, in particular, is a flawed creature of Congress.
14. Plug new numbers into the EFC calculator if your financial situation changes due to such things as a divorce, separation, death, disability, job loss or the care of an elderly parent.