What Goes Into the Expected Family Contribution (EFC)?

Dear College Made Simple reader,

If you’ve started searching for colleges, you’ve probably also started investigating financial aid.

If you haven’t yet, there’s no better time than now.

That’s because – for many families – the amount of financial aid available will greatly affect what college they attend. That means, before you can make any final decisions, you need to know what you can afford… and what percentage of need the schools you’re even thinking about attending typically meet.

Nothing matters more in that calculation than your Expected Family Contribution (EFC) – the focus of today’s report.

– Scott

How Your Expected Family Contribution (EFC) Works

Your EFC is calculated when you fill out the free FAFSA form. Your EFC is exactly what it sounds like – the amount of money your family is expected to be able to pay towards your schooling.

The gap between your EFC and your college expenses – including tuition, books, fees, and room and board – is your need. Depending on the school you choose, you can have the majority of your need covered by grants… or on the flip side, the school you choose may only meet a small percentage of your need and have the bulk of what they do give covered in loans.

Regardless, you’ll want your need to be as high as possible – thus making you eligible for the most possible money.

That means you want your EFC to be as low as legally possible. Knowing how your EFC is calculated is the first step.

What Goes Into An EFC?

First things first: Student money gets counted (both income and assets) at a higher rate then parent money.

Income matters most – and students are expected to pay a greater percentage of their income towards schooling then parents are. Do note – dividends are included as income. Don’t forget this – a failure to accurately report all income can result in ineligibility.

After that come assets – and there’s a big difference here. A student can be expected to pay as much as 20% of any savings he or she has, while parents are capped at 5.64%. Some assets will count against you in the formulas… and others will not. This may also depend on the type of school your student is considering.

Finally, debt on assets (such as a mortgage on a house or a margin loan on a stock account) are subtracted from assets. Cars don’t typically count as assets – so, if you need a new one, it may make sense to buy one before you submit your FAFSA application.

However, keep in mind that liquidity is very important – in general and especially during the college years – so you don’t want to spend your liquid assets just to lower your EFC.

Also, the money in retirement savings plans typically don’t count as assets – but new contributions to those accounts may count against you, depending on what grade your student is in.

In short, by understanding these calculations, you’ll do a better job reducing your EFC – and increasing your grant and loan money.

To your college funding & admissions success,

Scott Weingold

Co-Founder, College Planning Network LLC

Publisher, CollegeMadeSimple.com – The free educational resource of College Planning Network


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Editor's Note: Scott Weingold has been ranked the #1 “College Financial Aid Expert Worth Knowing About” in the entire country by CollegeStats.org.  He has co-authored the book, “The Real Secret To Paying For College. The Insider’s Guide To Sending Your Child To College – Without Spending Your Life’s Savings.” Scott also publishes a popular free online newsletter, “College Funding Made Simple" which reveals insider’s tips, methods, and strategies for beating the high cost of college.

Scott is the co-founder and a principal of the widely renown College Planning Network, LLC – the nation’s largest and most reputable college admissions and financial aid planning firm. CPN is a proud member of the Better Business Bureau, the National Association of College Funding Advisors, the National Association for College Admission Counseling, the National Association of Student Financial Aid Administrators and the Student Affairs Administrators in Higher Education.

Scott, along with his college funding advisory team, helps thousands of families throughout the country with their college planning needs and offers a series of free educational webinars and workshops on “How To Pay For College Without Going Broke In The Process!” He's been featured or mentioned in The Philadelphia Inquirer, Yahoo News, TheStreet.com, Voice America with Ron Adams, Crains Cleveland Business, and on Cleveland Connection with James McIntyre.  Scott has published numerous articles and is a professional speaker who has addressed thousands of audiences online and offline throughout the United States.  His actionable insights and candid, open approach have earned him & his team numerous media interviews, citations, and speaking opportunities, and his free online video workshop is one of the Internet’s most widely viewed pieces in the college funding space.