EFC (Expected Family Contribution)

EFC is the number that determines your financial aid eligibility. It's calculated from your FAFSA (Free Application for Federal Student Aid) and represents what the government thinks your family can afford to pay for college.

Note: As of the 2024-25 school year, EFC has been replaced by the SAI (Student Aid Index), but the concept is the same.

How EFC Works: **Financial Aid = Cost of Attendance

• EFC**

Example:

• College costs: $40,000/year
• Your EFC: $15,000
• Financial aid eligibility: $25,000

The school can offer up to $25,000 in aid (grants, loans, work-study).

What Affects Your EFC:

1. Parent income (biggest factor - 22-47% of income above threshold)
2. Student income (50% of student income above ~$7,000)
3. Parent assets (up to 5.64% of assets)
4. Student assets (20% of student assets

• much worse!)

5. Family size (more people = lower EFC)
6. Number in college (siblings in college = lower EFC per student)

EFC Calculation (Simplified):

Parent Contribution:

• Income after taxes and allowances × 22-47%
• Assets (savings, investments) × 5.64%
• Does NOT include retirement accounts or primary home

Student Contribution:

• Income above $7,040 × 50%
• Assets × 20%

Example Family:

• Parent income: $80,000
• Parent assets: $30,000
• Student income: $5,000 (summer job)
• Student assets: $4,000 (savings account)
• Family size: 4 (2 parents, 2 kids)
• 1 child in college

Rough EFC Calculation:

• Parent income contribution: ~$6,000
• Parent assets: $30,000 × 5.64% = $1,692
• Student income: $0 (under threshold)
• Student assets: $4,000 × 20% = $800
• Total EFC: ~$8,500

This family could qualify for aid at schools costing more than $8,500/year.

EFC Ranges and What They Mean:

$0-$5,000 (Low EFC):

• Qualifies for maximum Pell Grant (~$7,395)
• Strong financial aid packages
• May get full rides at wealthy schools

$5,000-$15,000 (Moderate):

• Partial Pell Grant eligibility
• Good aid packages at expensive schools
• May struggle at mid-tier private schools

$15,000-$30,000 (High):

• No Pell Grant
• Limited aid except at very expensive schools
• "Donut hole"
• too much for aid, not enough to afford easily

$30,000+ (Very High):

• Minimal to no need-based aid
• May still qualify for merit scholarships
• Expected to pay most/all costs

Strategies to Lower Your EFC:

1. Minimize Student Assets: ❌ Don't save in child's name (UTMA/UGMA accounts) ✅ Save in parent's name or 529 plan (lower assessment rate)

2. Time Income Correctly: FAFSA looks at "prior-prior year" income:

• For 2025-26 school year → uses 2023 income
• Delay bonuses, Roth conversions, selling stocks until after base year

3. Maximize Retirement Contributions: 401(k) and IRA contributions reduce your income for EFC purposes and aren't counted as assets

4. Spend Down Student Assets Before Parent Assets: Use student's savings for college prep costs (computer, test prep) before filing FAFSA

5. Have Siblings in College Simultaneously: EFC is split among multiple kids in college (parent portion, not student portion)

6. Report Assets on Best Day: FAFSA asks for assets "as of today"—file when account balances are lowest (after paying bills)

Common Misconceptions:

❌ "EFC is what we'll pay" → No, it's the minimum. Schools can gap you. ❌ "High EFC means no aid" → Merit aid is still available regardless of EFC ❌ "We make too much to file FAFSA" → Always file! Required for federal loans even without need ❌ "Grandparent 529s don't count" → Pre-2024 they affected next year's aid; post-2024 FAFSA, they don't

EFC vs SAI (New in 2024-25): The new SAI (Student Aid Index) can go negative (as low as -$1,500), which EFC couldn't. This expands Pell Grant eligibility for lowest-income families.