The definition of the Expected Family Contribution (EFC) from the Department of Education web site is that it is a measure of your family’s financial strength and is calculated according to a formula established by law. Your family’s taxed and untaxed income, assets, and benefits (such as unemployment or Social Security) are all considered in the formula. Also considered are your family size and the number of family members who will attend college or career school during the year.
The information you report on your Free Application for Federal Student Aid (FAFSA) is used to calculate your EFC. Schools use the EFC to determine your federal student aid eligibility and financial aid award.
Note: Your EFC is not the amount of money your family will have to pay for college nor is it the amount of federal student aid you will receive. It is a number used by your school to calculate the amount of federal student aid you are eligible to receive.
The amount of money your family WILL have to pay for college is calculated differently by each and every college, based on a variety of factors. Generally speaking, colleges expect a family to “contribute” their EFC amount each of the four years a student is taking classes… as if this is a “voluntary” contribution! Think of the number as your family “deductible.” A college will use the EFC to calculate Unmet Need to determine what financial aid package will be offered. By taking the total Cost of Attendance (COA) and subtracting the EFC from it, a college determines Unmet Need. Some colleges fund Unmet Need 100% while others may come nowhere close to that type of assistance for a family.
Having a burdensome EFC and underfunded “Unmet Need” is a recipe for disaster for a family’s financial security. Families need to plan ahead for what the total cost of attending college is going to be. Starting the process while their student is a sophomore, or even a rising junior is very important in these times of ever-rising college costs.
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