As families start to dip their toes into the murky waters of the college application process, there’s one thing that’s crystal clear—college is very expensive and getting more expensive every year. A family’s best safeguard against being pulled underwater by college costs is to become fully educated about the college financial aid system.
That education starts with an understanding of a special number, EFC, or Expected Family Contribution, a measure of what a family can contribute toward college costs each year. EFC is the base of your need-based financial aid package.
Financial Need at a college is determined by this simple equation:
COA (Cost of Attendance) – Your EFC = Your Need
If your EFC is less than the COA, you qualify for need-based financial aid (grants, student loans, and work-study). The lower your EFC, the more need-based aid you qualify for.
Your EFC is generated through an analysis of parent and student income and assets as reported on the FAFSA, the Free Application for Federal Student Aid. Any family wishing to be considered for need-based financial aid must fill out and submit the FAFSA each year.
Most families are stunned when they see their EFC for the first time because they feel it’s much too high—that it would be impossible for them to contribute that much money every year toward college costs. And, in fact, they’re right. Today, the EFC actually reflects a combination of what you can pay now and what you can borrow and pay over time.
Continue reading “Your EFC: What It Is, How It’s Calculated, and Why It Matters”