Expected Family Contribution

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The Expected Family Contribution (EFC) is an estimate of a student's, and for a dependent student his or her parents', ability to contribute to a year of post-secondary education expenses. The EFC is used in the student financial aid process in the United States to determine an applicant's eligibility for need-based federal student aid, and in many cases, state and institutional (college) aid. It is located on the Student Aid Report and Institutional Student Information Record sent after the Free Application for Federal Student Aid (FAFSA) is processed. [1] If the FAFSA has not yet been filed, there are a number of calculators on the Web (see links below) that will give a good approximation of a family's EFC.

Student financial aid in the United States is funding that is available exclusively to students attending a post-secondary educational institution in the United States. This funding is to assist in covering the many costs incurred in the pursuit of post-secondary education. Financial aid is available from federal, state, educational institutions, and private agencies (foundations), and can be awarded in the forms of grants, education loans, work-study and scholarships. In order to apply for federal financial aid, students must first complete the Free Application for Federal Student Aid (FAFSA).

The Free Application for Federal Student Aid (FAFSA) is a form completed by current and prospective college students in the United States to determine their eligibility for student financial aid.

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Need-based aid has to be reapplied for each year; that is, a new FAFSA must be filed every year, the EFC is recalculated, and the financial aid possibly adjusted.

The EFC is not what a student's family actually pays, which is usually higher, sometimes much higher.

Use of the Expected Family Contribution

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The federal government does not distribute aid directly to the student or the student's family; it goes through the college. Colleges use the student's federal student aid eligibility and combine it with state financial aid (if any) and their own aid to create a financial aid package (award), which is sent to the student. Generally speaking, the lower the EFC the higher the financial aid award will be. Zero is the lowest EFC number (the family cannot afford to pay anything) and 999,999 is the highest.

Some relatively wealthy colleges and universities use the CSS Profile, or have their own form, to calculate their own (private) EFC, which they use in distributing the college's own aid. A major difference between the FAFSA and the CSS Profile is that the CSS Profile takes home equity (value of your house) into account when determining ability to pay, while the FAFSA does not.

The CSS Profile, short for the College Scholarship Service Profile, is an online application created and maintained by the United States-based College Board that allows college students to apply for non-federal financial aid. It is primarily designed to give member institutions of the College Board a comprehensive look at the financial and family situation of students and their families to use as they determine their eligibility for institutional financial aid. It is more detailed than the United States federal application, Free Application for Federal Student Aid or FAFSA.

The EFC is subtracted from the cost of attendance (COA) of the college or university to determine a student's financial Need. If COA > EFC, then a student has financial Need. Colleges attempt, but often are unable, to see that the student receives all the aid she or he needs.

In discussions of the cost of college in the United States, the cost of attendance (COA) is a statutory term for the estimated full and reasonable cost of completing a full academic year as a full-time student. The cost of attendance is published by each educational institution and includes:

If the EFC is less than the maximum Pell Grant ($5,730 in 2014–2015), the student will receive a Pell Grant. The amount of the grant is the difference between the EFC and the maximum Grant. If the EFC was $3,000, the student would receive a grant of $2,730 (in 2014–2015).

A Pell Grant is a subsidy the U.S. federal government provides for students who need it to pay for college. Federal Pell Grants are limited to students with financial need, who have not earned their first bachelor's degree, or who are enrolled in certain post-baccalaureate programs, through participating institutions. The Pell Grant is named after Democratic U.S. Senator Claiborne Pell of Rhode Island, and was originally known as the Basic Educational Opportunity Grant. A Pell Grant is generally considered the foundation of a student's financial aid package, to which other forms of aid are added. The Federal Pell Grant program is administered by the United States Department of Education, which determines the student's financial need and through it, the student's Pell eligibility. The U.S. Department of Education uses a standard formula to evaluate financial information reported on the Free Application for Federal Student Aid (FAFSA) for determining the student's expected family contribution (EFC).

Calculation

Parents often want to know how their EFC has been calculated. The formula is complex, changes every year, depends on three tables (dependent students, independent students without dependents other than a spouse, and independent students with dependents other than a spouse), and is published in the Federal Register. An Education Department document explaining how the EFC is determined fills 36 pages. [2] Briefly, it looks at family size, allows for living expenses, and at family and student savings. If the student is a dependent, which is usually the case with a teenage college freshman, the student's savings and income, if any, are considered highly available to pay for college. A student with a college savings fund in his or her name will have a higher EFC (if not qualifying for an automatic zero), and will usually receive less need-based aid.

<i>Federal Register</i> Official journal of the US federal government

The Federal Register is the official journal of the federal government of the United States that contains government agency rules, proposed rules, and public notices. It is published every weekday, except on federal holidays. The final rules promulgated by a federal agency and published in the Federal Register are ultimately reorganized by topic or subject matter and codified in the Code of Federal Regulations (CFR), which is updated annually.

Automatic Zero and Simplified Needs EFC

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Lowering the EFC

Items that lower a student's EFC:

Colleges or universities have the legal authority to lower the EFC if there are unusual circumstances, usually brought to the financial aid office's attention as the result of an appeal of a financial aid award. These circumstances include:

Exclusions

Actual family payment

A common misconception is that the EFC is a statement of what the family actually will pay. This is usually not the case, and many families have to pay more, sometimes much more, than the EFC. In an ideal world, in which all colleges had enough financial aid to meet all students' financial need, the EFC would be what the family contributed. In reality, only wealthy, selective colleges (the hardest to get admitted to) have the resources to cover every student's need. When the college cannot cover all of the need, the remainder must come out of the parents' resources.

In a few cases, in which a student qualifies for merit-based (rather than need-based) financial aid, the family pays less than the EFC.

Independent and dependent students

Students who are unmarried, younger than 24, and not supporting a minor child are categorized as Dependent Students, and the parents' income and assets are used in determining the EFC. Even if the parents have no intention of helping pay the student's college expenses, which legally they are not required to do, the student remains dependent and the parents' income and assets are used in determining the EFC and through it, the student's financial aid award. Put differently, if the parents are able but unwilling to help pay for the student's college, financial aid will not be increased because of it. [5] This was determined by the United States Congress.

In exceptional cases, such as parental child abuse and parental communication with the child being prohibited by a court, the college financial aid office has the authority to change a student's status from Dependent to Independent.

See also

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References

  1. ↑ U.S. Department of Education, Federal Student Aid. Introduction to Federal Student Aid Course. Retrieved from: http://www2.ed.gov/offices/OSFAP/training/fundamentals/module.htm#m-1001-0
  2. ↑ https://studentaid.ed.gov/sa/sites/default/files/2017-18-efc-formula.pdf, retrieved September 1, 2017.
  3. ↑ "Archived copy" (PDF). Archived from the original (PDF) on 2013-02-24. Retrieved 2013-05-01.Cite uses deprecated parameter |deadurl= (help)CS1 maint: archived copy as title (link)
  4. ↑ U.S. Department of Education. "The EFC Formula, 2019–2020" (PDF). Retrieved May 30, 2019.
  5. ↑ Kathryn Knight Randolph, "How to Deal if Your Parents Won't Pay", https://www.fastweb.com/financial-aid/articles/how-to-deal-if-your-parents-won-t-pay retrieved 10 June 2017
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