Key takeaways

  1. The US Department of Education estimates a family's ability to pay for college through their Expected Family Contribution (EFC)
  2. EFC determines federal and institutional financial aid eligibility and is subject to annual changes based on income and asset fluctuations
  3. Your EFC includes parent and student income and assets, adjusted for taxes
  4. Families and students can explore alternative options such as private scholarships, federal and private loans, or delaying college if unable to meet EFC
  5. Starting in the 2024-25 academic year, the Student Aid Index will replace EFC

The US Department of Education (ED) estimates how much it thinks your family can afford to pay for college. This number is called your expected family contribution.

Your EFC determines the amount of federal financial aid you can receive and the institutional financial aid colleges award. 

It is important to note that your EFC is subject to change annually, as it is influenced by fluctuations in your family’s income and assets yearly.

Here’s everything you need to know about the expected family contribution and how it impacts your need-based aid.

Expected family contribution defined

Expected family contribution includes your parent’s income and assets and your student income and assets. EFC is adjusted for federal and state taxes paid by your family, as well as a portion of income that your family is not expected to contribute.

Your school’s financial aid office deducts your EFC from the cost of attending college to determine your award for federal student loans, work-study income, Pell Grants, and Federal Supplemental Educational Opportunity Grants. The EFC is also used to calculate your potential financial need for school scholarships and grants.

Understanding your EFC and how it’s calculated

Special considerations for EFCs

When determining your expected family contribution, it’s important to understand that your financial aid package will vary from school to school based on tuition costs and other factors.

For this reason, it’s wise to look at several schools when researching college options. This can help you to understand the true cost of attendance and determine if the school meets your financial needs.

In addition, you should review any available scholarship and grant options to reduce your EFC and make college more affordable. Speak with your school’s financial aid office or research online to learn more about potential opportunities you may be eligible for.

Calculation of EFCs

The federal government calculates your EFC using the numbers you provided in the Federal Application for Federal Student Aid (FAFSA).

It considers your family’s income, investments, assets, and the number of family members attending college (if applicable). Bigger families, or those with an above-average number of college students in the household, will have lower EFCs and generally receive more financial aid.

Your Financial Need = Cost of Attendance – Expected Family Contribution

Consider this scenario: you’re seeking admission to a prestigious private school that carries a hefty price tag of $75,000. Upon completing the FAFSA, you discover that your EFC amounts to $10,000. In this case, your calculated financial need will be $65,000.

Your EFC can be found in the top right corner of your Student Aid Report (SAR) once your application is complete.

Here are instructions for viewing your Student Aid Report.

No-loan schools and EFC

A no-loan school is an institution of higher education that does not require students to take out loans to pay for college.

These schools are often independent and have a commitment to meeting the financial needs of their students without relying on them taking out educational loans.

All no-loan schools use EFC as part of their admissions process, but they might also consider other factors such as your family size, number of dependents, and whether you are a dependent student or not.

Currently, 19 colleges meet 100% of their students’ financial needs without loans, irrespective of income. However, most of these schools are in the ‘elite’ category with massive endowments.

Even at no-loans institutions, some families and students may need to borrow money for college costs. Since many of these institutions don’t participate in the federal student loan program, students usually use a private lender.

How to lower your EFC and increase financial aid eligibility

To maximize your chances of securing a portion of limited financial aid funds, promptly submit your FAFSA and any supplementary documents required by your school. By doing so, you can ensure that you receive your fair share of available financial assistance.

Suppose your school is unable to meet your full financial needs. In that case, your family may explore alternative options to bridge the financial gap, such as unsubsidized federal student loans, private student loans, or federal PLUS loans for parents, graduate students, and professional students.

When you cannot meet the full amount of your expected family contribution (EFC), these student borrowing options can come to your rescue.

Additionally, you can explore alternative avenues such as:

  • securing private scholarships
  • starting at a community college
  • attending part-time
  • delaying college

EFC changes coming in 2024

Starting in the 2024-25 academic year, the Student Aid Index will replace the EFC. This change is part of a simplified FAFSA that will become available to students in December 2023.

Final word

It’s important to remember that various resources are available to help you pay for college, and the EFC is just one factor in determining eligibility for these funds.

Research all of your options and consider speaking with college financial aid officers to find out how much financial aid you qualify for and the most appropriate funding plan for your family.

No matter what, remember that you don’t have to go it alone. Resources and support systems are available throughout the application process, so be sure to take advantage of them to receive the college education you deserve at an affordable price.