Expected Family Contribution - How Much Student Financial Aid Are You Eligible To Receive?
Just how much college financial aid will you be eligible to receive? In order to make that determination you will need to calculate your Expected Family Contribution or EFC. The lower your estimated EFC, the more financial aid you're eligible to receive.
Expected Family Contribution plays a major role in the college financial aid award process. In the case of federal aid, your EFC is determined from the FAFSA application. It's very important to learn about the FAFSA form, specifically the questions asked, because errors made while completing the form can negatively impact your EFC. It's not just the student's financial situation that affects EFC. The parent's and student's income and assets impact the EFC.
In addition to income and assets related questions, you will answer questions on the FAFSA related to the number of children in the family who are in college and family size. If a family has three kids in college, then the parents will have a third of the parent contribution as the same family with one child in college. The EFC calculation, determined by the federal government, is a complex formula that:
takes into consideration the custodial family's size
provides an income protection for basic living expenses
takes into account the amount of liquid savings available from the student and parent, (hint: students' savings have a dollar for dollar greater impact on the EFC than do parents'), and
requests a disclosure of business and investment income.
The EFC formula does not consider the financial strength of the non-custodial parent, home equity, accounts protected for retirement like IRAs, and small business value . Once the federal EFC is calculated, the financial aid office will determine your or your students' need.
The calculations are not yet over! Another simpler formula is now applied. Subtract your Expected Family Contribution from cost of attendance to get your federally calculated need. In cases where the EFC is greater than the cost of attendance, the college financial aid applicant will be considered a "no-need" student and will only be eligible for non-need based financial aid.
Some find this EFC business to be downright confusing. If you're not a little confused already, then perhaps this will do the trick! Many institutions, mainly four-year private colleges, employ their own EFC calculation, typically referred to as Institutional methodology. The College Board provides most commonly used institutional application -- the CSS profile. The CSS profile, unlike the FAFSA, has a cost associated with the application. While colleges use your Federal EFC determined from the FAFSA to calculate federal aid eligibility for federal loans, grants, and work-study, they apply their own EFC number to calculate fund eligibility.
Institutions with sizeable endowments, like private universities, may use their own methodology to determine what type of students they wish to recruit and retain with the help of their own funds. But federal student financial aid eligibility must always be determined by federal methodology, a fact which must be disclosed on your financial aid award letter. In further contrast to the FAFSA form, institutional EFC forms can and often do ask more pointed financial questions than the FAFSA application. For instance, non-custodial parents and their spouses must disclose their income and assets. Home equity from both parents is also used in the calculation.
Fortunately, the CSS profile and similar student aid applications ask you to disclose your expenses rather than relying upon an income protection allowance used in the federal EFC calculation. This enables students and families to disclose higher than average household expenses. If your family has experienced financial circumstances or hardships that are not reflected on the FAFSA and CSS profile, then it's possible to approach the financial aid office for revisions to the EFC.
Christina Tangalakis is a financial aid counselor at Central Washington University, and writes about student financial aid for FinancialAidFinder.com. Financial Aid Finder is a free website for students and parents with detailed information about college scholarships, college grants, work study and state financial aid programs. Tangalakis contributes regular blog postings about college financial aid on the website under the Financial Aid News heading.
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