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What Is EFC?

by Bold Org Editorial Team
October 2, 2023
11 min read
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If you are a student navigating college financial aid, you might hear the term EFC often pop up. If you are still questioning what exactly EFC is and why it is important - do not worry. is committed to providing clarity on crucial college topics that are vital to know for your success. This Bold blog will cover the basics of EFC, provide an understanding of its calculation, explore its influence on financial aid, discuss strategies to lower it, dispel common misconceptions, and learn how to navigate changes to your EFC. So, let's get started!

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Understanding EFC

The term EFC refers to Expected Family Contribution (EFC). This contribution is a major factor that financial aid officers assess when determining your financial aid package. Depending on the number provided, your cost of attendance at any institution, whether private or public, could change drastically. This formula, used by colleges and universities, plays a significant role in determining the amount of financial aid you are eligible to receive.

Definition of EFC

While it may sound like a far more complex term, the concept is quite simple. In short, it refers to the amount of money your family is expected to contribute to your education expenses. Generally, students who continue to live with their parents are considered dependent students, meaning they are still financially reliant on their legal guardians.

Almost all institutions understand that a student's school responsibility also falls on to their parents. At the very least, students should be able to receive some help from family members unless they are in a unique, difficult situation.

Colleges and universities use a specific formula to calculate your EFC. This formula takes into account various factors such as your family's income, assets, and household size. The institution can assess your family's financial ability to contribute to your education by analyzing this information.

It's important to note that your EFC is not the actual amount of money you will have to pay for college. Instead, it serves as a starting point for determining your financial aid package.

Definition of EFC

The Importance of EFC

Understanding your EFC is crucial when planning for your college education. It helps colleges and universities assess your financial need and plays a significant role in determining the type and amount of financial aid you may receive.

Need-based financial aid is often awarded based on your EFC to determine how much your household can afford. The lower your EFC is, the higher the chances you have of receiving need-based aid such as grants, scholarships, work-study programs, and loans. On the other hand, if your EFC is higher, you may not be prioritized for need-based aid and may need to explore other options to finance your education.

By understanding your EFC, you will be able to better understand your financial situation and plan accordingly prior to heading off to college. It provides the autonomy to explore different avenues of financial aid and make educated decisions about college choices. Furthermore, it will give insight into which schools will best meet your financial needs.

While EFC might feel like a singular fixed number, it is important to acknowledge that it is normal to fluctuate throughout your time at college. It can vary yearly based on changes in your family's financial circumstances. Therefore, it's vital to regularly review and update your financial information to ensure that your EFC reflects your current situation.

The Calculation of EFC

Considering the Expected Family Contribution (EFC) is one of the most crucial components of determining your student aid report, it is in every student's interest to understand how to calculate it. Understanding the factors that influence your EFC and its formula is key to planning your financial aid strategy.

Factors Influencing EFC

Unless you are financially an independent student, several key factors significantly determine your EFC. These factors typically include your family's income, assets, family size, and the number of family members attending college simultaneously (if any).

To fully grasp the extent to which your parents can afford your college's expenses, the EFC formula ensures a comprehensive understanding of all the expenses your parents are responsible for. The EFC formula considers both your parents' and your own income (if applicable) when calculating the EFC.

As you probably figured, family income is critical in determining your EFC. The formula considers your parent's adjusted gross income, which includes wages, salaries, and other sources of income. It also considers any untaxed income your family receives, such as child support, tax-exempt interest, or housing allowances.

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Additionally, the EFC formula considers your family's assets. This includes savings accounts, investments, real estate (excluding the family's primary residence), and business assets. Together, these assets determine your family's ability to contribute towards your education expenses.

Another factor that often goes overlooked is family size. The formula recognizes that larger families may have more financial responsibilities and adjusts the EFC accordingly. Similarly, if you have siblings also attending college, the EFC formula considers the increased financial burden on your family when determining your financial aid award.

Once all these factors are considered, the EFC formula produces a numerical value representing your Expected Family Contribution. Colleges and universities use this number to evaluate your financial need and determine the amount of financial aid you may be eligible to receive.

Factors influencing EFC

How EFC Affects Financial Aid

EFC and Federal Student Aid

The Expected Family Contribution (EFC) is a crucial factor in determining your eligibility for Federal Student Aid programs. Given that student aid is generally reserved for students with lower financial security, EFC can be used to determine how much assistance you require.

Programs such as Pell Grants, Federal Work-Study, and Direct Subsidized Loans are free forms of financial assistance to help students pursue higher education. In its calculation, the EFC takes an abundance of factors into account. Together, these numbers illustrate the amount of money the government expects you and your family to contribute towards your education expenses.

Regarding Federal Student Aid, the lower your EFC, the more aid you are likely to receive. You automatically have a higher chance of obtaining more financial assistance programs if your EFC is low, as the government is committed to making college more accessible to low-income students. These forms of aid can significantly reduce the financial burden of attending college and make higher education opportunities available.

EFC and Institutional Aid

Similar to Federal Aid, many colleges and universities consider the EFC when determining eligibility for their institutional aid programs. Some institutions provide scholarships, grants, and tuition assistance exclusive to their students. Every school has its own requirements and methods for awarding institutional aid based on the EFC.

For example, a university may be more inclined to offer merit-based scholarships to students with a high academic achievement and a low EFC. These scholarships can be significant, as they are typically renewable and can cover a considerable portion of tuition costs.

Furthermore, some colleges and universities have their own need-based grant programs that consider the EFC. Sometimes, the price tag of college is still too much, even with Federal Financial Aid. These grants are designed to bridge the gap between the cost of attendance and the amount of federal aid received. By weighing EFC as a factor in awarding institutional aid, they can ensure that financial assistance is distributed equitably among students who have differing financial circumstances.

While the EFC is a huge component of financial aid, it is crucial to acknowledge that it is just one aspect of the overall evaluation. Other factors, such as academic performance, extracurricular involvement, and personal circumstances, may also influence the type and amount of aid you receive. Therefore, it is crucial to explore all available financial aid options and complete the Free Application for Federal Student Aid (FAFSA) accurately and on time to maximize your eligibility for both Federal and institutional aid.

EFC and Institutional aid

Strategies to Lower EFC

Income and Asset Management

An effective strategy to lower your Expected Family Contribution (EFC) is through income and asset management. Minimizing taxable income, taking advantage of tax-deferred savings plans like 529 plans, and strategically managing assets can reduce EFC and potentially increase a student’s eligibility for financial aid.

There are several strategies to employ to minimize taxable income. One option is investing in retirement accounts such as a 401(k) or an Individual Retirement Account (IRA). This option allows not only saving for the future but also lowering taxable income in the present, which can ultimately lower the EFC.

Another way to reduce taxable income is by maximizing deductions. Some transactions can be subtracted from taxes. Keep track of any eligible expenses that can be deducted, such as mortgage interest, medical expenses, or charitable contributions. By being on top of these deductions, you can lower your taxable income and potentially decrease your EFC by thousands.

Utilizing tax-deferred savings plans like 529 plans is another potential solution to help lower EFC. Particularly, a 529 plan is a tax-advantaged investment account designed to save for education expenses. Contributing to this plan can ensure savings for education and potentially decrease EFC.

Finally, strategically managing assets is another important aspect of lowering the EFC. When applying for financial aid, certain assets are evaluated more than others. For example, money held in a student's name is assessed at a higher rate than money held in a parent's name.

Income and Asset management

Utilizing Tax Benefits

Another efficient way to reduce your EFC is by taking full advantage of the tax benefits related to education expenses. Ensure that you review and stay updated on tax credits, deductions, and other educational benefits available to you or your family, such as the American Opportunity Credit or the Lifetime Learning Credit.

The American Opportunity Credit is a tax credit that can be claimed for qualifying education expenses incurred during the first four years of post-secondary education. Typically, this includes the years dedicated to obtaining your bachelor's degree. This credit can provide significant savings, potentially reducing your tax liability and lowering your EFC.

The Lifetime Learning Credit, on the other hand, is a tax credit available for both undergraduate and graduate students. This credit allows you to claim a percentage of qualified education expenses up to a certain limit. By taking advantage of this credit, you can reduce your tax burden and potentially lower your EFC.

Several other tax benefits are also available, such as the tuition and fees deduction or the student loan interest deduction. These benefits have the tendency to be overlooked, but with proper attentiveness, you can maximize your savings and potentially decrease your EFC to make college more affordable.

Prior to implementing these strategies, it is important to employ careful consideration. Consider consulting with a financial advisor or tax professional. By taking proactive steps to lower your EFC, you can potentially increase your eligibility for financial aid and make higher education more affordable.

Common Misconceptions About EFC

A common misconception is that the EFC represents the exact amount a family is expected to pay for college. While it measures your family's financial assistance, it is by no means an obligation your parents must pay. Your actual out-of-pocket expenses will vary based on the institution’s cost and other financial factors.

Although EFC is a huge contributing factor and might provide a rough idea of what to expect, it is not the fixed amount you must pay. EFC is a benchmark colleges and universities use to assess your eligibility for financial aid.

The actual cost of attending college can vary significantly depending on the institution you choose. Some colleges are known to have higher tuition fees and living expenses, while others may offer more generous financial aid packages. Therefore, it is essential to research and compare the costs and financial aid opportunities at different schools to make an informed decision.

Another misconception is that receiving private scholarships will automatically reduce your EFC. However, that is not always the case. Although some schools may use private scholarships to adjust their institutional aid, possibly affecting the overall financial aid package, it does not necessarily affect the EFC calculation.

EFC and Private Scholarships

The majority of the EFC is determined by the information presented on the Free Application for Federal Student Aid (FAFSA) and other similar financial aid applications. While private scholarships are included in your total financial aid package, they may not directly impact the EFC calculation. Instead, colleges and universities may adjust their institutional aid based on a student’s additional funding received from private scholarships.

Specifically, if you receive a significant private scholarship, the college or university may choose to reduce how much institutional financial aid they offer you. This adjustment ensures that the total financial aid package remains within the institution's budget and aligns with its policies. Therefore, while private scholarships can help reduce your overall college expenses, they may not directly lower your EFC.


Still, private scholarships are a vital source of funding for thousands of college students across the country. They are awarded by various organizations, foundations, and companies based on diverse criteria, such as academic achievement, community involvement, or unique talents, ensuring an opportunity for everyone. A private scholarship is typically added to your financial aid package, which can help reduce your overall out-of-pocket expenses. is an excellent resource committed to helping students fight student debt by providing access to an abundance of scholarships for people with varying backgrounds. Students are encouraged to apply for scholarships earlier rather than later but may continually explore scholarship opportunities while in college.

Consider creating a account today to minimize your college costs. You can find opportunities that are catered to your success as a student.

Updating Your EFC

Do not be alarmed if your EFC fluctuates every year. It can vary depending on changes in your family's financial situation, the number of family members in college, or other relevant factors. For example, if a sibling goes to college during your third year of college, that will be calculated into your family contribution. Make sure to update your FAFSA (Free Application for Federal Student Aid) each year to reflect the most accurate information.

Appealing Your EFC

Suppose you believe your EFC does not accurately reflect your family's financial situation. In that case, you have the right to appeal your EFC to the financial aid office of the respective college or university. Provide appropriate supporting documentation and explain any special circumstances that may warrant a reconsideration of your EFC.

EFC and private scholarships

Frequently Asked Questions About EFC

Is your EFC the same for all colleges?

Yes, the factors that calculate the EFC are standard among all colleges and universities. The FAFSA is the financial aid resource shared amongst students from various schools to make it easier for the federal government to keep it simple.

Can I still receive financial aid if my EFC is high?

Absolutely! Many students fail to fill out a financial aid application every year because of a misunderstanding that they will not qualify due to their parents' contribution. However, it is recommended that every student fill out an application because you will be able to receive at least something every year. While it may not be much, and you might have to rely a lot on student loans, it can be helpful.

What does it mean to be an independent student?

Being an independent student refers to a student who is financially self-sufficient and not reliant on their parents or guardians for financial support regarding their education. In higher education, independence is often associated with eligibility for certain financial aid and scholarships. If you solely rely on your own income, that may significantly increase your chances of obtaining more financial aid.

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