What is Your EFC?

Do you know what the term Expected Family Contribution or EFC means?

Most of you probably don’t so I’m going to devote the next couple of blog posts to explaining what an Expected Family Contribution or EFC is and why it’s so incredibly important.

If you file for financial aid, you will obtain your EFC, but I think you should get this figure long before your child is a senior in high school.

You should also retrieve your EFC even if you think that there’s no chance in the world that your family will qualify for financial aid. Many people who assume that they won’t get need-based aid do qualify, especially if their children attend expensive schools.

To appreciate why I’m always telling people to figure out their EFC, you need to understand what it is.

What EFC Means

An EFC is the amount of money, at a minimum, that a college will expect you to pay for one year of your child’s college education. Often times you will have to pay more than your stated EFC unless you’re attending an elite school with excellent financial aid packages.

Your EFC will be expressed as a dollar amount. A low-income family could have an EFC that’s as low as $0. There is no ceiling to how high the EFC can be for wealthy families. The highest I’ve ever seen was about $108,000 for a family where the father was a CEO. Obviously, $108,000 is way above the price of one year’s costs at any college.

Generating this preliminary number will allow you to know what kind of financial commitment you could face when your child heads to college. Getting advance notice is better than waiting until your child receives his or her financial aid packages in the spring of her senior year in high school.

Even if you have a high EFC (you’re rich), it’s still good to know this because then you can focus on finding schools that provide merit aid (in higher-ed lingo it’s called non-need-based aid) to affluent students. Luckily for these kids, most schools award merit aid. The only ones that don’t — there are probably no more than three or four dozen — are the Ivies and other super elite schools. These schools don’t need to give out merit aid because they have rich kids flocking to their schools and their parents will pay whatever price necessary to get into these institutions.

Next post:

Next time I write, I’ll explain how you can obtain your EFC.


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