What is EFC? It’s short for Expected Family Contribution. Basically, it is a number derived from the Free Application for Federal Student Aid (FAFSA) that shows your family’s financial health and how much you should be able to contribute to your child’s college education for one year. Where does this number come from? It’s really too complicated to explain in great detail here, but it essentially factors in your family’s income, taxable investment assets, college savings accounts, the number of children enrolled in college, your household size, and even your marital status (just to name a few). Most parents are stunned when they view their EFC for the first time, so don’t be alarmed if you think it’s incorrect, too. Our wonderful elected officials in Congress are the ones who actually created the EFC formula, so it’s no wonder that it seems a bit flawed. Just remember that it’s an estimate of what you should be able to pay for college and that your actual amount may be quite different.
Your EFC can range from zero to just about any number imaginable. And just like golf, you’ll want the lowest number possible. Why? Because this number will be subtracted from your Cost of Attendance (COA) to determine your financial aid need. But, having an EFC of zero doesn’t necessarily guarantee that you’ll be off the hook for paying anything for college. It all depends on where your child enrolls and whether the school meets 100% of your need or not. Unfortunately, most colleges are in the “not” category. But, there are a few things you can do to help lower your out-of-pocket expenses, such as starting at a community college or seeking out colleges that offer hefty need-based scholarships. If your EFC is on the higher end of the scale, you may want to have your child research colleges that provide large merit-based scholarships. Generally, however, you’ll cover your EFC through a combination of cash, student loans (federal and/or private), and outside scholarships.
It’s a good idea to estimate your EFC during your child’s junior year of high school, as this will give you some indication of how much you may be required to cover at each of the colleges on your child’s list. Knowing this figure upfront can not only help you plan for future costs, but also help you (and your child) keep student loan debt to a minimum. You can estimate your EFC by using one of the several online calculators, or get an idea of how much financial aid your child may receive by using the FAFSA4caster from the U.S. Department of Education.
If you find that your EFC seems too high (and it probably will), be sure to recheck your FAFSA for potential typos or errors that may have caused an error in calculations. If everything is correct, but you still have some extenuating circumstances that might lower your EFC (such as a job loss), make an appointment with the college’s financial aid office. In some cases, the college may be able to offer additional financial aid. It never hurts to ask. All they can say is “no.”