What is Your Expected Family Contribution (EFC)?

There is a lot of confusing language (and plenty of acronyms) when it comes to paying for college and financial aid. You may be surprised to know that “expected family contribution” or “EFC” is not necessarily the amount of money your family will actually end up paying your college. So what exactly is the EFC?

Expected Family Contribution is a measure of a family’s financial strength, which is used to determine a student’s eligibility for financial aid. The EFC is calculated based on information provided on the Free Application for Federal Student Aid (FAFSA), including general financial information such as family income, assets, and household size.

The EFC represents the amount of money the family is expected to contribute to the student’s education expenses, and is used by colleges and universities to determine the student’s financial aid package. The lower the EFC, the more financial aid the student is likely to receive.

(Note: “EFC” is being phased out and will be replaced by the Student Aid Index, or SAI, starting with the 2023-2024 academic year.)

Once your FAFSA is processed, you will receive a Student Aid Report (SAR) that includes your EFC. The SAR will also be sent to the colleges and universities you listed on your FAFSA. These schools will use your EFC to determine your eligibility for need-based financial aid, which includes grants, scholarships, work-study programs, and federal student loans.

The schools will use your EFC to calculate your financial need, which is the difference between your EFC and the cost of attendance (COA) at the school. The COA includes tuition, fees, room and board, textbooks, and other education-related expenses. They will then put together a financial aid package that may include a combination of need-based aid and non-need-based aid, such as merit-based scholarships. The financial aid package will detail the types and amounts of aid you are eligible to receive.

1. The financial aid office determines your cost of attendance (COA). This includes things such as tuition, room and board, books, and other essential needs.
2. Next, your EFC comes into play. The college subtracts your EFC from your cost of attendance to determine the amount of your financial need. This results in any need-based financial aid awards such as grants, work study, and possibly scholarships. (Typically this is where the “free” money for college ends.)
3. You will then be eligible for non-need-based aid to help cover gaps left, such as federal student loans. Any remaining balance will need to be covered by your family, and may include seeking out private student loans.

It’s important to note that the EFC is just an estimate and that actual financial aid awards may vary depending on the specific policies and procedures of each school, as well as the availability of funds. You should also be aware that some schools may require additional financial aid applications or documentation beyond the FAFSA.

What is a Good EFC Number?

There is no specific EFC number that can be considered “good” or “bad” as it varies depending on individual circumstances. The EFC is determined based on various factors, including family income, assets, and household size, so what might be considered a feasible EFC for one family could be a high EFC for another family.

That being said, a lower EFC generally means that a family has less ability to contribute to their student’s education expenses and may be eligible for more need-based financial aid. On the other hand, a higher EFC may indicate that a family has more financial resources available to contribute to their student’s education expenses and may receive less need-based financial aid.

It’s important to note that the EFC is just one factor that colleges and universities use to determine financial aid eligibility. Other factors such as the cost of attendance, the availability of funds, and the student’s academic and extracurricular achievements also play a role in determining financial aid awards.

Still unclear on how EFC affects student aid?

Let’s add some sample numbers to help. For example: what would an EFC of $50,000 mean?

An Expected Family Contribution (EFC) of $50,000 means that the family is expected to contribute $50,000 toward the student’s education expenses for the academic year. This amount is calculated based on the financial information provided on the Free Application for Federal Student Aid (FAFSA), which takes into account the family’s income, assets, and household size.

A family with an EFC of $50,000 may be eligible for financial aid, but the amount of aid received will depend on the cost of attendance at the school the student plans to attend. If the cost of attendance is higher than the EFC, the student may be eligible for need-based aid to cover the difference.

It’s important to note that the EFC is just an estimate and is used as a starting point for financial aid awards. Actual financial aid packages may vary based on the specific policies and procedures of the college or university, as well as the availability of funds.

What if I have a low EFC?

If your Expected Family Contribution (EFC) is low, it may indicate that you have a high level of financial need and could qualify for more need-based financial aid which can include things like grants, scholarships, work study programs, and federal student loans that are awarded based on your financial need as determined by your EFC.

To maximize your eligibility for need-based financial aid, you should fill out the Free Application for Federal Student Aid (FAFSA) accurately and completely, and submit it as early as possible. This will give you the best chance of receiving need-based financial aid from federal, state, and institutional sources.

And don’t forget, in addition to need-based aid, you may also be eligible for merit-based scholarships, which are awarded based on academic, athletic, or other achievements. These scholarships do not depend on your EFC and can help to cover some of the cost of your education as well.

You may also consider alternative funding sources, such as gifts from extended family or friends, and private student loans. But be sure to review private loan options carefully to find the best fit for your situation, as interest rates and fees can vary among lenders. In many cases credit unions can offer better rates versus traditional banks or other private lending sources.

Ready to cover the gap and find a private student loan? We can help you find a credit union partner for your lending needs.