Calculating the Expected Family Contribution (EFC)

Instructor: Christopher Sailus

Chris has an M.A. in history and taught university and high school history.

In this lesson, we explore the Expected Family Contribution (EFC), an incredibly important factor in determining whether a prospective student is eligible for financial aid.

Expected Family Contribution

A college or university education in the 21st century can be incredibly expensive. Maybe you are lucky enough that your entire education will be paid for by yourself or by a trust setup by a family member, but for most of us, educational funding comes from a range of sources. Personal funds, family contributions, student loans and grants; most students cobble together some combination of these sources to pay for their education.

In many cases, one of these factors impacts the other. In fact, a family's ability to contribute to the student's education has a massive effect on the amount of federal funding the student can receive. In this lesson, we will explore the factors that determine the Expected Family Contribution (EFC) for a student.

About the EFC

The EFC we are going to discuss today is the federal EFC, as required on a student's Free Application for Financial Student Aid (FAFSA), the form everyone must fill out to be eligible for federal financial aid. Some colleges and universities calculate their own EFC or use a different EFC dependent upon the average cost of the school to determine college-based loans and grants. As these vary, we will only worry about the federal EFC for this lesson.

The EFC is a number which states how much a family can reasonably be expected to contribute to a student's education. It's important to note this is not a required contribution or does not stop a family from contributing more; in fact, most families will end up contributing far more than the total that is calculated by the EFC. It is simply an accounting technique for the government to help determine how financially needy a student is. Essentially, the higher the EFC (i.e., the more money a family can contribute to the student's education), the less federal financial aid a student needs, and vice versa.

As this is a measuring tool for financial aid, the vast majority of factors that determine the EFC are income and expense-based. These factors can include the income and assets of a student, his/her parents, his/her spouse, the age of their parents, and the number of siblings they have currently enrolled in a college or university.

Calculating the EFC

Calculating the EFC is a rather complex procedure, and forms can be gained from the federal government to calculate it by hand. Roughly speaking, the EFC corresponds to the student's contribution and the parent's contribution added together. These contributions are based on tax bracket, age of a student's parents, but mainly on the amount of discretionary income leftover for a student and his/her parent after they have paid all their fixed expenses.

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