How to Use an Expected Family Contribution Calculator

In the video in this lesson, I explain how you can use an online Expected Family Contribution calculator.

Use the Right EFC Calculator

The easiest way to obtain an advance look at your Expected Family Contribution is to use the EFC calculator at the College Board’s website.

One of the first questions that you will encounter when using the College Board’s EFC calculator is which methodology you want to use – the federal methodology or institutional methodology or both. You should designate both methodologies since at this point you don’t want to limit your school choices.

EFC calculator

 The vast majority of colleges and universities in this country only use the federal methodology, which is what the Free Application for Federal Student Aid depends upon.

In addition to the FAFSA, 229 mostly private colleges and universities require undergraduate applicants to complete the CSS/Financial Aid PROFILE, which uses the institutional formula. The handful of public universities using the PROFILE include University of Michigan, University of Virginia, College of William and Mary and the University of North Carolina, Chapel Hill.

Here is the list of institutions that use the PROFILE.

The Different EFC Formulas

All schools use the federal formula, via the FAFSA, to determine if a student qualifies for federal and/or state financial aid. Most schools also rely on the federal FAFSA results to determine if students will qualify for need-based aid from their own institutional need-based grants.

PROFILE schools use the institutional formula results to determine if a student qualifies for their in-house pots of money. The EFC generated by the institutional formula is often different from the federal EFC because it drills deeper into a family’s finances.

You’ll learn more about the differences between these formulas in the module entitled, Financial Aid Basics.

EFC Questions

To use the EFC calculator, you need to have your income tax return and investment statements ready.

Here are the main questions that the calculator will ask:

  • Number of people in household.
  • Marital status of parents.
  • Age of parents.
  • Age of children.
  • Number of children in college.
  • Parents’ adjusted gross income from the most recent calendar year.
  • Parent’s income taxes paid for most recent calendar year.
  • Student’s adjusted gross income.
  • Student’s income taxes paid.
  • Any claimed education tax credit.
  • Medical expenses.
  • Cash, savings, checking for parent(s) and child.
  • Non-retirement investments for parent(s) and child.
  • Business equity.

The federal formula doesn’t ask about retirement account assets, but the PROFILE does. It’s considered rare, however, for a PROFILE school to take retirement wealth into consideration for financial-aid purposes.

Once you’ve plugged in the information, the calculator will produce an estimated EFC for the federal methodology and another EFC for the institutional methodology.

Actually, a student who is applying to PROFILE schools would end up with multiple EFCs. Each school can modify the basic PROFILE application by including supplemental questions that will generate a different EFC for each school.

After submitting their FAFSA online, a family will learn what their EFC is by receiving their Student Aid Report (SAR) by email. The PROFILE won’t notify parents about what their institutional EFC is.

EFC Example

To illustrate how the EFC calculator works, I used the following stats for a hypothetical family:

  • Marital status: Married.
  • Oldest parent: 55
  • One child heading to college
  • Siblings: 16-year-old sister
  • Parents adjusted gross income: $150,000
  • Home equity: $100,000
  • Non-retirement assets (including 529 accounts): $50,000
  • Student’s adjusted gross income: $2,000
  • Student’s assets: $500
  • Parents income taxes: $20,000

EFC Results for Hypothetical Family

:EFC results.jpg

Interpreting Your EFC

Okay so what do these figures mean?

In this example, the family’s share of the costs would range from $29,365 to $30,697 for one year of their child’s college education.

If the school’s sticker price is less than the EFC, the student would be ineligible for need-based financial aid.  In this circumstance, however, a student may qualify for a merit scholarship, which is not tied to need.

If this student is applying to an expensive private school with a generous aid policy, he could be in line for significant need-based aid.

As a practical matter, when a family’s EFC is this high, a merit scholarship will come close to filling the gap between the EFC and the school’s cost of attendance.

Let’s say, for instance, that the student in the above example got into a school with a $46,000 sticker price and received a merit award of $11,000 a year.

Cost of attendance: $46,000
Minus $11,000 merit scholarship
Minus $29,365 (EFC)
$5,635 Demonstrated need

The remaining need would be $5,635. It’s unlikely that most schools would cover this additional cost except for including a federal student loan in the package.

Inside the EFC Formula

While a lot is riding on a family’s EFC, the EFC formulas are hardly scientific. The EFC can be a fairly harsh assessment of a family’s ability to pay, but that is the figure that the schools will be working with.

The federal EFC formula is a creation of Congress, which goes a long way towards explaining why it is flawed.

It’s likely that your EFC(s) won’t pinpoint what your family can truly afford to pay for college. Many families are shocked when they generate their EFC’s.

The federal and PROFILE formulas, for instance, don’t consider household debt. The formulas don’t care if a family is in bankruptcy. In what’s a plus for some households, however, the federal formula doesn’t count a family’s assets if the parents’ adjusted gross income is less than $49,999.

Parents won’t get a break from the federal formula if they live in an expensive area like San Francisco where the median-priced house costs more than $1 million compared to houses in an inexpensive area like Pierre, SD, where plenty of houses are priced in the $150,000 range. The PROFILE formula does take into account where a family resides.

If you’d like to see exactly what factors that the federal EFC includes in its calculations, you can check out the federal government’s latest EFC formula which is updated every year:

EFC Formula, 2018-2019

Unfortunately, much of the PROFILE formula, which belongs to the College Board, is proprietary.

Bottom Line:

1. Knowing your EFC(s), no matter how depressing, allows you to start targeting the best sources for the type of money that your child will qualify for.

2. If you have a low EFC, you’ll be looking for generous sources of need-based aid.

3. If you have a high EFC, you’ll be looking to maximize your chances at merit money, which isn’t tied to financial need.

Let's Connect

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  1. A question about financial aid and deferring:

    What happens if you get the aid package and you ultimately decide to defer enrollment? Do you go back to square one with financial aid or does the package stand, regardless of the changing numbers of the family?


    1. Post

      HI Nancy,

      You would want to verify this with a particular school when you ask if the acceptance can be deferred. You should, however, be using the next year’s tax return which in your case would be for 2017.

      Lynn O.

      1. Oh good. My next question was whether it would be okay to ask that. This feels like a game of chess, and the way I play would play chess is to discuss it with my opponent… :/


        1. Post
  2. Hi Lynn,
    I am wondering what happens when figures for the year the EFC is based on change radically the following year.

    So the numbers for myself and my exhusband for tax year 2016 are the ones that go into the calculator, but the year 2017 taxes will report 10s of thousands less in income. Surely this gets taken into account for a student entering in the fall of 2018? At what point can the new figures be introduced? Can it affect the aid package or will a more accurate assessment of our ability to pay come too late?


  3. Hi Lynn,
    Are you familiar with College Cost Navigator & do you think consultants need it to best serve clients?
    Also, what’s your input on National College Advocacy Group?
    So many tools & organizations to use but I’m unsure if I need them.
    Lastly, can we still access the webinar you hosted at the end of Jan?

    1. Post

      Hi Eva,

      I have heard of College Cost Navigator, but don’t know anything first hand about it. I took a look at the site and I suspect that financial folks use this software. I would recommend that you check out Guided Path which is clearly a software program for educational consultants. In fact, one of the founders of HECA (Cyndy McDonald)started the company many years ago. The firm has a very good reputation and I greatly admire Cyndy.

      I would talk to someone who is a member of the NCAG before deciding whether to join or not. It has some good financial professionals in the group, but there have been guys who just sell insurance who have joined in the past. One person who I would consult is Paula Bishop, a CPA in Bellevue, WA. Her email is

      Good luck.

      Lynn O.

  4. Hi Lynn,
    Are you familiar with College Cost Navigator & do you think consultants need it to help clients?
    Also, what’s your input on National College Advocacy Group? So many tools & organizations to use but I’m unsure if I need them.

  5. Hi Lynn- I am filling out the College Board EFC Calculator. I am confused at the questions about assets and home equity. Are we supposed to put the # from our 2015 tax return or the number as it stands right now in Feb. 2017. The home equity in our house we owned when we did the 2015 taxes and indeed for most of 2016 or the house we own now (as of 5 months ago). Same question for the assets. It is a very different picture depending on the answer to the question and I suppose the whole prior prior thing is confusing me.

    1. Post

      Hi Kerry,

      Great question. Your actual EFC will be determined by your two-year-old tax returns. In contrast, you will use your CURRENT assets when completing the FAFSA and PROFILE. Assets would include your home equity. The value of your assets, including your home equity, should be based on what they are worth the day you file your applications or the day before.

      Lynn O.

  6. Lynn
    Thank you for walking us through various examples of the EFC calculation. I have some questions as follows after I tried to do a preliminary EFC from the College Board website:

    1) If my son (16) had a summer job, do his earnings have to be reported for the Student’s gross income section?

    Untaxed Income Worksheet – questions
    2) How are social security death benefits counted? My sons, jrs. in high school, currently receive income from their deceased father’s soc. sec. death benefits but those payments will cease when they turn 18 or graduate high school which will be the case by the time my sons are eligible to enter college. That income not be available so do I have to report it in this calculation (i.e. all other untaxed income?)
    3) Do I have to report my pre-tax contributions to my 401K and pre-tax health spending/flex accounts?

    1. Regarding your college question about social security income: FAFSA and Profile treat it differently – not included for FAFSA, included for Profile.

      For the FAFSA, untaxed social security, either for the parents or kids under 18 is NOT included on the FAFSA. For a parent, ‘some’ social security is often taxed, if the family’s AGI is over about $40K, but that’s only to a max of 85% of the social security received. The other 15% is considered untaxed social security, and this 15% is not taxed. In general, all social security received by a child (or their siblings) is untaxed, as they very seldom earn over $40K in other income.

      For the Profile, they treat it differently. This is how it’s worded:

      Enter the untaxed social security benefits your parents received or
      expect to receive for all family members except you, the student.

      The Profile form wants the 15% of the parent’s social security income that is never taxed for federal income tax purposes, AND the social security received for other kids in the family but NOT the student (in case the family has multiple children receiving SS). They must realize that the student’s SS ends when they go to college.

      As for the question about the pre-tax conributions, yes you have to report the contributions to your 401k and your health spending/flex accounts. Those contributions will be added back to your income.

      Lynn O.

  7. Goose Evening

    I have been working with the college board calculator. The IM family contribution is less than the federal family contribution. The IM contribution is about $7,000 less. What accounts for the difference?

    1. Hi Katherine,

      Your IM could be lower because the PROFILE allows parents to automatically shield more nonretirement money than the FAFSA does. Also the PROFILE does take into consideration where a family lives. It adjusts the EFC if you live in some high-cost areas.

      Lynn O’Shaughnessy

  8. Hi Lynn:

    I have a question about the EFC calculator on Under finances, “untaxed income/benefits” it asks for “deductible IRA and Keough payments” and “Health Savings Account deductions”. Is the deductible IRA payment the amount of money I deducted from my paycheck pre-tax into my retirement account? And is the Health savings account the pre-tax deductions I put into my HSA? If this is true, are we expected to redirect all our retirement savings and medical savings into paying for college (according to the government and schools, anyway)? Also, I have been receiving disability benefits on and off since 2015. I assume I need to put that in “other untaxed income”?

    Thank you,

  9. Hi Lynn,

    I wanted to follow up on the questions about UTMAs and 529s. It sounds like 529s are always better than UTMAs b/c the money is treated as a parental asset and counted at a much lower rate. So since we have some money in both an UTMA and a 529, it would make sense to close out the UTMA and move it to the 529, right?

  10. Hi Lynn,

    Just for own clarification. A family with a high EFC, say $40,000 should be looking at colleges for merit scholarships as a way to cut costs. However, if the COA of the college is $65,000, then this family’s demonstrated need is $25,000.

    Can’t this family also be looking at expensive colleges with generous need-based aid?

    1. Hi Linda,

      You can use the resource guides with your clients!

      A family with an EFC of $40,000 would normally be looking for schools that provide very good merit aid and ideally have a lower sticker price. A family with an extremely bright child who has an opportunity to get into elite schools (keep in mind the very small odds) could end up qualifying for need-based aid at schools that meet 100% of need or a very high percentage.

      Lynn O.

  11. Hi Lynn,

    So, I am working with a rising senior who has a sibling who is a rising junior.

    If the senior attends a private expensive college where she does not qualify for need-based aid as a freshman, what is likely to happen her sophomore year when her sister attends college. Now the family has two children in college at the same time. I can easily see how the second sibling would benefit when applying as a freshman for need-based aid. But what about the older sibling. What can she expect year 2 for financial aid? Is it common for sophomores to receive need-based grants?

    1. Hi Linda,

      If the oldest attends a school with excellent need-based aid, she should be able to get financial aid when the sibling starts college since the EFC for each child will be significantly lower. The older sibling would need to file for financial aid the second year.

      The family could run net price calculators with that scenario.

      If the oldest child attends an expensive school with mediocre financial aid, she might not get anything more when the sibling heads to college. Some schools will adjust the EFC based on the youngest sibling’s school. If the youngest sibling is attending an inexpensive state school, for instance, the oldest child might not the full or any benefit of an EFC reduction.

      I would suggest that the family run net price calculators to see what impact a second sibling in college would have.

      Lynn O.

  12. Hello Lynn,

    Question regarding the value to be entered within the untaxed income section. As an example, I am a self-employed sole proprietor and make $18k contribution (employEE contribution) to an individual 401k account and another $10k contribution (employER contribution). Can you confirm that only the employee contribution (the $18k) should be included, and not the $28k total contribution?

    Thanks in advance!

    1. Hi Paul,

      Only the employEE portion of the contribution is considered untaxed income, not the employER contribution. It’s sort of like when a company matches your 401K contribution, that match is not considered untaxed income.

      Lynn O.

  13. I just did the EFC on the College Board. I think it will be an awakening for families to see what the government believes they can contribute and what they know they can contribute. I’m going to add this step to what I ask parents to do before they come see me.


  14. I just completed the EFC on the college board website. But I think I may have filled out the Student Info incorrectly. I have twin boys who are rising seniors with a third son 3 years younger. This may be a dumb question but for for the sibling that is the twin (who will be entering college in fall of 2017), do I indicate “Yes” or “No” as to being in college?

    Secondly, I now have my EFC totals – is the EFC total for both my twins? Or is this the EFC for just one of the twins? I am having a very difficult time determining if I should look at this total as my grand total of what to expect to hand out for both my twin boys OR if this is the total I expect to hand out for each of my twin boys?

    1. HI Michele,

      I am glad you tried out the College Board’s EFC calculator!

      You should indicate that you have two children in college because that will be the case next year. If you indicated that there will only be one child in college next year, your EFC will be wrong. The EFC you generate (when indicating two children will be in college simultaneously) will be for one child.

      With two children in college, the EFC drop by 50% with the FAFSa and 40% with the PROFILE.

      Lynn O.

  15. When I go to the EFC calculator on the college board website (and also to the net price calculator on the college websites), it asks if I want to log with the college board website to be able to save my info. My twin boys each have a log in. Should I be setting up my own parent log in to the college board or simply grab one of their credentials to be able to save it?

    Thank you.

  16. Hi Lynn,

    Just to clarify, when you said not to enter SEP contributions into the calculator, you meant not in the assets portion, correct? They do belong in the untaxed income section?

    Also, am I correct that FICA/self employment tax is not considered in the calculator?

    Finally, my accountant does not allow me to write off all unreimbursed medical and dental but looks like the calculator does? I am self-employed.

    Thanks for all your help!


    1. Hi Rosalie,

      You are right. You should not include your SEP assets in the EFC calculator. You will put your SEP contributions for the base year in the untaxed income section of the calculator.

      You shouldn’t confuse the tax laws with the financial aid formulas. Some PROFILE schools will give families a break for their medical and dental expenses, but that has nothing to do with the IRS rules in terms of who can deduct medical expenses for tax purposes.

      I don’t see a question on the calculator about FICA/self employment taxes.

      Lynn O.

  17. Hi Lynn,

    I used the calculator. I ran 4 scenarios with income levels of: $115,000, $130,000, $170,000. All 4 scenarios included the following: a family of 4, 1 child going to college, one that is 15 years old, one parent employed (with no other income, expenses, credits elsewhere other than federal taxes paid).

    For each of the 4 scenarios I then recalculated them adding $40,000 in cash accounts for the parents.

    In all 4 scenarios when I included the $40,000 in cash, the change in what parents/students would be expected to pay was less than $1,000 difference than the scenarios without the 40,000 cash.

    What accounts for this?

    Perhaps I am not understanding something.

    1. Hi Ann,

      I would urge you to read the lesson, Investments and Financial Aid to learn a lot on this subject. Parent nonretirement assets are only assessed at a maximum of 5.64% and there is an asset allowance so some of this money would not all be considered. Bottom line: savings of $40,000 would have a very minimal impact on financial aid.

      Lynn O’Shaughnessy

  18. Hi Lynn,
    I am on the college board’s EFC calculator and have questions regarding the input. It asks for the AGI and then the next line it asks for the earnings from work. Are these different? Aren’t they the same number?

  19. Lynn,

    Instead of a 529 Plan I have an Educational IRA. The money I put in to it is after-tax dollars. Where does this information go in the EFC?

    1. Hi Catherine,

      The money in a Coverdell Education Savings Account is considered a parent asset that would be included with other parent nonretirement assets on the FAFSA.

      Lynn O.

  20. Before I attempt to figure out our ETF, I wanted to ask a question. I mentioned in my intro that my husband has a few properties in partnerships. Two are houses that he inherited with his 8 siblings. The assessed values for his 1/8 shares, based on a very low assessment on the property tax records, are small, about $15,000 each. I know that at least two, if not all, of my husband’s siblings didn’t include these properties in their FAFSA. Their thinking was that 1) the property cannot be sold and no one sibling has access to any equity, and 2) any income they produce goes straight back into maintaining these properties. This makes me uncomfortable, though, even if it is true. These properties are listed on our tax return. Doesn’t or can’t FAFSA or CSS look at your tax return? And if so, wouldn’t that be a big, red flag. I don’t think of my in-laws as unethical, and the one’s I spoke to were very matter-of-fact about it. Are they right? Is it not expected that I include my husband’s 1/8 shares when applying for financial aid?

    1. Hi Lisa,

      You are right. Your husband’s assets in the partnership need to be declared.

      CSS/Financial Aid PROFILE schools routinely ask for copies of family income tax returns and this could be spotted. Also, the federal government randomly selects FAFSA for audits – I believe it’s one out of three – and it could be picked up there too.

      Lynn O.

      1. Thank you, Lynn.

        When I used the EFC calculator (not ETF like I typed before…) I included all properties. I didn’t expect the results to be good, but seeing those numbers–it’s alarming. When I think about what we have saved for college, you know, it seemed like a lot of money. It’s nothing.

        After, I plugged in our numbers in the net price calculator of a few school’s that I know my daughter would love to go to, if she could get in: Washington U in St. Louis and Rice. The results would have been laughable, if they weren’t so heartbreaking.

        I just feel terrible. I guess my daughter will have to rely on Merit Aid, but honestly, although she is a very hard-working and involved student that gets good grades, compared to some of these amazing superstars out there, I don’t know how she’ll be able to compete.

  21. Hi Lynn,

    Q1 I’m confused about the ages I’m supposed to enter in the College Board EFC calculator. I have twins that are in tenth grade. They turn 16 in July. Should I enter all of our ages (including parents and siblings) as of now, as of the end of this year, or as if my son was entering his senior year?

    Q2: My 401k contribution will count as Untaxed income/benefits, correct?

    Q3: Are the results calculated for the whole family EFC, or is the resulting EFC per each student that is going to be in school at the same time? I hope this the EFC per family, not per student! (The twins have the same amount of assets and income as each other, for planning purposes). So there’s only a need for me to run one calculation for one son on the College Board site for planning purposes, right?

    Thanks! -Paul

    1. Hi Paul,

      It shouldn’t matter if you put down that your twins are 16 or 15 or the age they will be as seniors when using the EFC calculator. The only age that matters is the age of the oldest parent on Dec. 31. Just to doublecheck on this, run the calculator with different ages and see if anything changes.

      Unfortunately, the EFC you generate is for each child. So if the calculator says your EFC is $25,000, each child would have an EFC of $25,000.There would be no need to run the calculator twice since each child’s asset/income is the same.

      Your 401(k) contributions for the base year will be counted as untaxed income. So if you contribute in 2015 to your 401(k) and you file the FAFSA in 2016, those 2015 contributions need to be included. In this scenario, contributions to a 401(k) earlier than 2015, however, wouldn’t be mentioned.

      Lynn O.

      1. Oh my! Thanks. While I count my blessings about my current financial situation, this puts us squarely in the category of seeking schools that offer merit aid (which might be, as you suggest, away from the east coast). I am nervous about whether this is realistic since most on this forum seem to have introduced themselves as superior in terms of their scores, grades, activities — practically perfect children, while mine are just smart, athletic, and kind (lovable “above-average” kids).

        1. Hi Paul,

          Don’t get discouraged! Quite a lot of parents who gravitate to my website and classes tend to be highly educated with high achieving kids. They have wanted what is best for their children since birth and have been actively involved in their children’s lives through the years and they are naturally seeking answers to this looming milestone – college.

          The parents in this class though are not representative of the moms and dads with teenagers in this country. Most families start actively thinking about college during the fall of the senior year and most of them end up attending a community college or the nearest regional state university. I want to add that there is nothing wrong with going to the nearest state school! I did this myself as a commuter student at the U. of Missouri, St. Louis, which was two blocks from my home before I transferred two years later to the journalism school at the U. of MO flagship when I decided to switch my major from history to journalism. I will be eternally grateful to UMSL for helping me discover my passion for journalism.

          One other thing, if my kids had had perfect test scores and GPAs, I wouldn’t have gotten into this field. As a financial journalist I began exploring my oldest child’s options because her high school GPA wasn’t nearly good enough to get into the top University of California campuses – where she originally thought she wanted to go. As I was stressing about all this, I discovered that getting into most colleges, including amazing institutions, isn’t nearly as hard as I thought. UCLA’s annual survey of college freshmen backs me up. Every year, the study shows that about 75% of full-time freshmen got into their No. 1 choice four-year institution.

          Lynn O.

      2. Hi Lynn,

        I am getting conflicting information regarding EFC for families with two kids in college. In your explanation to Paul D. above the EFC calculated would be for each child however in Troy Onink’s article below it states that the EFC would be split between two kids. What really is the answer for families in situations like these? Thank you.

        EFC With Two Kids in College at the Same Time

        Note that under both formulas, if parents have two children in college, the parent’s portion of the expected family contribution is not twice what it would be for one child. In fact, in the federal formula, the parent’s portion of the family contribution gets split equally (50/50) among the number of students in college. So if the parent’s have one child in college and have an earned income of $140,000, their EFC will be about $32,000 per year for that child. With two children in college, the parent’s EFC will get split 50/50 and applied to each child’s overall EFC, or $16,000 each. The CSS Profile applies a little more than half the parent’s contribution (60%) to each of two students. Bottom line: If you have more than one child attending a pricey private college, you may qualify for need-based aid even at a fairly high income level.ach. The CSS Profile applies a little more than half the parent’s contribution (60%) to each of two students. Bottom line: If you have more than one child attending a pricey private college, you may qualify for need-based aid even at a fairly high income level.

        1. Hi Georgina,

          Your EFC will drop by about 50% when there are two children in college at the same time with the FAFSA formula. So if the EFC is $50,000 for one child, with two in college the EFC would drop to about $25,000 for each of them.

          With the PROFILE formula the EFC will drop by about 40%.

          I hope that clears up the confusion.

          Lynn O.

          1. This is certainly good news and thank you for clearing up my confusion.

            Georgina D.

  22. Hi Lynn,

    I did the calculator on the college board site for both methodologies. I expected the IM method to be greater because of our home equity (over $150,000), but it actually came out lower. So I don’t understand what the point is of the CSS Profile. Will schools use the numbers for a purpose beyond the EFC?


    1. Hi Tom,

      The PROFILE is often higher and every institution can tweak its institutional formula in many ways. People who live in expensive areas such as East and West Coast cities are given a reduction in their EFC via the PROFILE. It’s around either $3,000 or $4,000. The FAFSA does not give an allowance to parents who live in expensive areas. For $150,000 in home equity, your institutional PROFILE would go up $7,500 with this calculator, but keep in mind that some PROFILE schools ignore home equity and some link it to income. I have a lesson on this in the class.

      The College Board institutional calculator uses the full value of your home equity. The PROFILE gives you more of a break depending on the number of children in the house and the FAFSA gives more of a break for the number of children in college simultaneously.

      Getting your EFC is just a starting point to know what kind of schools you should aim for. There can be a different EFCs generated for each PROFILE school your child applies to.

      Lynn O.

  23. Hey Lynn 2 quick questions in calculating EFC:

    1. For the Untaxed Income Category in the NPC (non-taxable retirement plans and/or receive in untaxed income and benefits) i.e. money my wife and I are socking away into our 401K Plans I know they want you to list ‘pre-tax’ income you have put into these accts. however do I need to also tell them abt ‘after-tax’ income Ive put away into 401k plans especially since Ive already been taxed for this money??

    2. Why do the colleges ask us to list the $s of my daughter’s siblings 529 programs? I understand them asking me about my child’s 529 program, which is a parent asset and makes sense in figuring out EFC, but its frustrating that they also want to use my other kid’s 529 savings programs against me in calculating EFC – not right in my opinion to use against you savings for your other kids.

    Thx Lynn,

    1. Hi Vijay,

      I think you have to tell them about any money you put into a 401(k). I will check this to make sure and will get back to you if the answer changes.

      As for 529 assets for siblings, the FAFSA does not ask about sibling 529 assets – only the CSS/Financial Aid PROFILE. The PROFILE counts these sibling assets if the sibling is under the age of 19 and not yet in college. I believe the thinking is that parents could move all the 529 assets from the child going to college into a younger child’s 529 account to make them disappear for financial aid purposes. Colleges don’t want that to happen.

      Lynn O.

      1. Hey Lynn,

        I just read this in one of your sections, and Im ‘assuming’ the same ‘logic’ would apply to my situation for my 401k plan if Im using ‘after-tax’ contributions into my 401k plan just like a Roth plan teats contributions as After-Tax??

        Parents won’t generate untaxed income, however, if they contribute to a Roth IRA because those contributions are made with after-tax dollars. People who contribute to a Roth don’t receive an upfront tax break like investors, for instance, who sink money into a 401(k) or a traditional IRA.

        Pls advise, thx


        1. Thanks Vijay. Yes, schools only want to know the contributions that reduce your Adjusted Gross Income, so after-tax contributions aren’t reported. That means Roth, extra contributions over the deductible amount of a 401k, are all not reported.

          Lynn O.

  24. Hi Lynn,

    Since we’re self employed and have our savings in taxable accounts rather than qualified retirement accounts, it is a problem for the financial aid formulas. Do annuities count as retirement? If we restructure the savings to annuities is that a benefit? We still have an investment real estate equity issue so I’m not sure it makes any difference. What are the best options for families with high assets but relatively low incomes. Thanks.

    1. Hi Trisha,

      The schools that use the FAFSA exclusively do not ask about annuities, but all the private schools that use the CSS/Financial Aid PROFILE do count any nonqualified annuities. That means annuities that aren’t in legitimate retirement accounts. And if you are going to beef up your retirement accounts, you would be much, much, much better off saving through IRA’s, 401(k)s and SEP-IRAs. The money in retirement accounts doesn’t count in either formula.

      I will say that if you decide to start putting money in retirement accounts, you should know that contributions you put in for your base year will be added back into your income via the financial aid forms the next year. So let’s say you put $40,000 into your SEP-IRA (how much you can put in depends on how much you make) in 2015 and you must file the FAFSA or PROFILE in 2016. You would have to mention these contributions. Now if you made the contributions in 2015, but you wouldn’t file for file for financial aid until 2017, you wouldn’t have to report these contributions on the aid forms.

      There are slimy people out there who claim they are financial aid experts who say they can hide your assets to get your EFC down, but you need to understand that nonretirement annuities must be reported on PROFILE schools. Retirement annuities, which are typically going to be expensive, would be treated as retirement assets. Of course, if you put money in retirement accounts they wouldn’t generally be available for paying for college and annuities also have penalties for early withdrawals.

      If you do want to ask about annuities and how this all works – they can be appropriate for FAFSA schools in some cases like when someone gets an inheritance right before the college years – you should talk to a real expert. I’d recommend Paula Bishop or Troy Onink.

      Generally, if you have a high EFC, you should look for schools that are lower cost to begin with – typically off the coasts – and that provide good merit scholarships. I have lessons about this in the course.

      Lynn O.

  25. Hi Lynn:
    I’m really looking forward to this class as I was woefully unprepared for son 1 who is now a sophomore at Elon. When son 2 starts college ( he is a HS junior) we will have 2 kids in college. Do I split my EFC of around $30k into 2 equal parts? If so, my EFC per child will be $15k which will put both of them in line for need based aid. Is that right?
    Vis retirement assets: I don’t suppose a rental property that I own, which I will sell when I retire, can be classed as retirement assets when calculating my EFC?
    Keep up the good work!

    1. Hi Teresa,

      I am glad you’ve been looking forward to this class! The financial aid formula will automatically adjust your EFC. With the FAFSA formula, your EFC will drop by about half for each child when both your sons are in college and your EFC will drop by about 40% for schools that use the CSS/Financial Aid PROFILE.
      Money generated by the sale of income property will not be classified as retirement money unless you put it in a qualified retirement account such as a IRA.

      Lynn O’Shaughnessy

  26. Hello, Lynn:

    After entering the non-retirement assets into the EFC calculator, I would guess it automatically removes the correct amount of “protected asset allowance” based on the total data entered in the form. Is this assumption correct? If so, that would mean applicants should put total non-retirement assets in (and not just the amount above the protected allowance).

    Your verification would be appreciated.

  27. Hi Lynn,

    I will try using the EFC calculator on the college board’s website as you suggested. Do I need to input my ex-husband’s AGI? My ex-husband has a high AGI, I have a low one.


    1. Hi Christina,

      The FAFSA will only require the custodial parent to file the FAFSA. If the custodial parent is married, you would have to include the latest spouse’s assets and income. It’s more complicated with the PROFILE schools. Most will require the noncustodial parent to file a supplemental financial aid form. How schools will assess the income/assets of the noncustodial parent will vary. For the EFC calculator’s institutional methodology you could guess at your ex-husband’s assets/income. I would urge you to read the lesson on divorce and financial aid in the module entitled, A Closer Look at Financial Aid.

      Depending on your income, as well as your ex-spouse’s, your son could end up qualifying for need-based aid at an in-state public university or FAFSA-only private school, but only qualify for merit aid at PROFILE schools.

      Lynn O.

  28. Why does the student contribution go up so dramatically in the IM EFC?

    What if the parent’s monetary assets change dramatically from freshman year to sophomore to junior, etc.? I am looking atsubstantial repairs/upgrades on my house in order to prepare it for sale in 3-4 years, and I anticipate a vehicle purchase in early2015 (I’d like to pay the majority by cash). In other words, how do colleges look at EFC that goes down substantially from year-to-year.

    1. Hi Deborah,

      The institutional methodology gives the student an EFC regardless of whether they work or not. Often a school will give a child a EFC that is in the $2,200 to $2,500 range.

      Families file for financial aid each year because income/assets do change. Whether a child will get money after the first year if the EFC drops will often depend upon how generous a school is to begin with. If a school is stingy, a lower EFC in subsequent years may not improve an award beyond an initial merit award. At a school with excellent aid policies, the student could get some need-based aid based on the new EFC.

      Lynn O.

  29. I ran the EFC with a dislocated parent and less than $49,999 AGI. Because of our assets, it gave me $1408 using the FM and $55,000 using the IM. Is the CSS profile more likely to be like the IM?

    1. Hi Carol,

      Nearly all state universities strictly use the FAFSA. And under the FAFSA is it possible to avoid sharing your assets if your AGI is under $50,000 and you are eligible to file either the 1040A or the 1040EZ rather than the regular 1040 tax return.

      You cannot shelter your assets with colleges that use the CSS/Financial Aid PROFILE. About 260 schools, nearly all private, use this form. The PROFILE wants to know what your taxable assets are regardless of your income. The PROFILE is the institutional formula.

      Schools, regardless of whether they only use the FAFSA or also use the PROFILE do not use retirement assets when calculating financial aid.

  30. Is the 529 plan considered the student’s asset or the parents? We started a 529 for our daughter and she is named as the beneficiary of it.

    1. Hi Janet,

      A 529 plan is considered a parent’s asset. Under the federal formula this money will be assessed at a maximum of 5.64% and the institutional formula, which about 260 mostly private schools use, would assess this money at 5%. You will learn much more about how investment are assessed in the lesson entitled, Investments and Financial Aid.

      Lynn O.

  31. I tried the College Board calculator and my FM result was 11,010 but in 2013 I had medical and dental expenses of 19,665 (schedule A, line 1). I won’t have that amount in 2014, thanks to the Affordable Care Act. How is that going to affect my EFC?

    1. Hi Deborah,

      It’s easy to measure the impact of not having the very large medical expenses for this year. Just run the calculator without the estimated expenses and you’ll see what the new EFC is. You can also try the calculator with what you anticipate line 1 of Schedule A will be, if you will have anything on that line.

      Lynn O.

      1. Of course. I should have thought of that. Thank you. It’s good that one can play around with figures at this stage of the game. I forgot to put in all my monetary assets and when I went back and did so, I had, of course, a far higher EFC, one I didn’t like at all. I’m learning a lot. Thanks again.