How to Navigate Expected Family Contribution (EFC)

If you’re helping your student prepare for college, you’re probably feeling overwhelmed. Usually, the big price tag is the biggest concern for parents. Financial aid helps, but sometimes filling out financial aid applications can stress you out even more!

Here are the steps you should follow to financially prepare for your child going to college.

Determine Your EFC

First, you’ll need to figure out your expected family contribution (EFC). Your EFC is based on a formula made by the U.S. Department of Education. Ultimately, it determines what financial aid your child is eligible for.

Even though this might be something you think you should put off for as long as possible, it’s better to figure this number out earlier. Ideally, you should have an EFC estimate during your child’s freshman year of high school. This will give you time to adjust your financial decisions accordingly. If you’ve already been saving for years, that’s great! This will probably be easy for you. But if you haven’t been saving, this still gives you a few years to prepare.

You can figure out your EFC online. One website with a reliable EFC calculator is Big Future’s College Board’s EFC calculator. Simply input information about your family, the student, and your finances to figure out your number. Sometimes, life circumstances change your EFC. For instance, family deaths, divorces, disabilities, job losses, or career changes all impact your finances. Make sure you update your EFC whenever something has a major impact on your finances.

Go to Multiple Sources for Your EFC

It’s important to figure out your EFC on your own, because not every college will do this for you. It’s impossible to find out how good or bad a college’s financial aid package is without factoring in your EFC. If you look at what the school is offering and you see a gap between your EFC and the cost minus grants, you can appeal it.

You need to ask the school for your EFC if it is not included in your child’s financial aid information. When you complete your FASFA application, you will automatically know your EFC as part of your child’s Student Aid Report. Make sure you double-check this report for mistakes. You will not get your EFC after completing a CSS Profile. If your student ends up attending an institution that uses the CSS, they will calculate a unique EFC for your student. This is because your EFC can widely vary if it’s being applied to the types of schools that need the CSS.

Find Out if You Need More Grants or Need-Based Assistance

There are two main types of financial aid: need-based assistance and merit-based scholarships. Use your EFC as a guide for determining what kind of financial aid you should be looking for in a college.

Learn Each School’s Definition of “Need-Based”

Different schools have different definitions of need-based financial aid. When applying to a state university with a household income between $60,000 and $80,000, you likely won’t qualify for any need-based financial aid.

Private schools work differently. Usually, you can qualify for need-based financial aid equal to the difference between the price of the college and your EFC. In other words, if the total college cost is $50,000, and your EFC is $20,000, you can expect $30,000 of need-based financial aid from the private institution.

Know Which Forms the Schools Require Before You Apply

Many schools only require the Free Application for Federal Student Aid (FAFSA), and other require the College Scholarship Service Profile (CSS Profile).  Some schools require both and will determine your aid of the higher of the two.  Forms are required every year for certain scholarships and financial aid so be prepared for the future.

Know Before You Go

Your EFC should be used to identify your college savings strategies and not just your financial aid.  Most families miss the opportunity to save on costs because they think they make too much money.

Too many overpay on college because they see a high EFC number and assume they are doomed to pay the college’s sticker price.

In Conclusion…

Now, you have the knowledge and tools to help you start the financial part of your child’s college application process. Even if you’ve already procrastinated at this point, there’s still a lot you can do to help your child pay a reasonable price for a great college!

For the last ten years, we have been helping college counselors, parents and other professionals on the way to find your student’s dream college and not overpay on the costs.

Schedule a free 30-minute strategy call to minimize the mistakes in your college planning.