How Expected Family Contribution Affects Financial Aid

Mother and daughter checking EFC.

Every parent wants their child to be accepted by the school of their dreams and to have the ability to pay for it. For most families, cost is a huge factor in choosing a college. Figuring out how to pay for higher education can be confusing. That’s because there are many factors to consider, including how much it will cost to attend each school and how much your family can afford to pay. Understanding the Expected Family Contribution (EFC) is important in this process.

What is Expected Family Contribution (EFC)?

Your Expected Family Contribution (EFC) is a number that financial aid administrators at colleges use to determine how much financial aid you will receive if you attend their school. The information from your FAFSA form is used to calculate your EFC. The EFC is not how much you will pay for college, nor does it reflect the amount of aid you will definitely receive. It just lets the school know how much aid you are eligible for, and it is vital for the financial aid process.

After all federal, state, and institutional aid has been considered, the college can then let you know what your family’s portion will be. Typically, the lower your EFC, the more financial aid will be offered. It can range from zero to any number.  

How is EFC Calculated?

Calculating EFC is done when the student and parents fill out the Free Application for Federal Student Aid (FAFSA). It’s a complex federal formula that considers many factors about your family, like:

  • Family income
  • Some family assets
  • Number of family members under 24 in college
  • Family size

Once you complete FAFSA, you will find out your family’s EFC for that year. Remember to complete the FAFSA form every year to qualify for financial aid. Your EFC can change from year to year, depending on your family’s financial situation.

If you want to estimate EFC, there are several online tools, such as the Department of Education’s FAFSA4caster and College Board’s EFC calculator. These resources may give you a picture of what your EFC results will be after you complete the FAFSA.

How EFC Affects Financial Aid

A low EFC means the student will qualify for a larger financial aid package. A higher EFC means the student may qualify for less need-based aid. Once EFC is determined, each college will use this information to determine how much aid you are eligible for. Keep in mind that it is important to complete the FAFSA as soon as possible after October 1st each year, to make sure you receive all the aid you are eligible for. Federal and state aid are first-come first-serve and funds do run out.

The difference between your EFC and how much each school costs is your financial need. That number is determined by subtracting your EFC from a school’s cost of attendance (COA). The COA is typically the amount of money it takes to attend that school for one academic year. It includes tuition, books, supplies, transportation, room and board, meal plan, and a few other small things. The COA for each school can vary greatly, depending on whether it’s public or private, and whether the student is paying in-state or out-of-state tuition.

After you are accepted and the school determines your financial need, you will receive a financial aid offer letter. It will detail what kind of aid you have qualified for, like:

  • Scholarships
  • Grants
  • Federal work-study jobs
  • Subsidized loans
  • Unsubsidized loans

Why Knowing Your EFC Matters

EFC is extremely important, especially as you consider which college you might be able to afford. If you know you’ll have a high EFC, you can concentrate your time on searching for merit-based scholarships, for example. Most students receive some financial aid and knowing your EFC may tip the scales in favor of one school over another.

Don’t be discouraged if your top school appears to be more expensive than others you’re considering. That school may offer more scholarships and grants to meet financial need, and in the end, is more affordable. All colleges are required to have a Net Price Calculator on their website to help families estimate the cost of attendance for that school. Do your homework! Take the time to calculate the numbers and call the school’s financial aid office to get more information.

College Foundation of North Carolina helps families plan, apply, and pay for college. Check out the list of North Carolina’s colleges and universities to help figure out which colleges may be the best fit for your student and your family’s budget.