5 things every family should know about their expected family contribution (EFC)

You fill out the FAFSA, which gives you your expected family contribution (EFC), which is how much your family will pay for college. Seems simple right? Ah, but like most things with the college process, that is unfortunately not the case. Here are 5 things every family should know about that EFC.

1 Your EFC is NOT what you will pay for college

“Expected family contribution” is misleading, as many people equate that to the amount they will need to pay for college. Instead, think of EFC only as a starting point. The FAFSA website defines EFC as “a measure of your family’s financial strength.” The rest is based on the cost -- and the financial aid policy -- of each college you apply to.

2 EFC determines what colleges call “need”

Colleges subtract your EFC from their cost of attendance to determine if you have financial “need” at their school. Because costs of attendance vary from school to school, you may have financial need at one college, and not at another.

3 If you have a low enough EFC to generate financial need, you may want to consider schools that offer generous need-based aid

Financial aid policies differ for every school, but there are a number of colleges that will meet 100 percent of demonstrated financial need. In order to do so, many will require the completion of a second, more rigorous form called the CSS Profile, and some will include student loans (as opposed to only free money in the form of grants and scholarships) in their definition of “meeting need.” No matter what the financial aid policy is, remember that you still need to be accepted to the school to get access to the financial aid package, a challenge at the more selective schools.

4 If you have a high EFC, you may want to consider schools with merit scholarships

If you have a high EFC that results in little to no financial need, the only real option to reduce the cost of attendance is to qualify for merit scholarships, such as those given for strong academics. The catch is that not every college offers merit aid, so you have to be sure you are applying to the right ones.

5 Your EFC is recalculated each year

Family financial circumstances change each year, so schools require you to fill out the FAFSA each year to qualify for any need-based financial aid as well as be eligible to take advantage of federal student loans. Because EFC is based on things like parent income and non-retirement assets, and the number of kids you have in college at the same time, it is important to plan ahead when considering the cost over all the years of college.

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