What Is EFC?

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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. Bold.org 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 the Basics of 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.


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 parent's 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.