How EFC Affects Your College Cost and Financial Aid Planning

Saving or raising money to pay for college can be a long and challenging process. There are a lot of elements that go into the planning, and so many affect one another. One of the biggest factors when it comes to financial aid is EFC.

Let’s break it down.

Two college students in conversation at a cafe.

What is EFC?

EFC stands for Estimated Family Contribution. It is the measure of a family’s financial strength. The FAFSA calculates EFC based on details you provide. Some of the details used in the calculation include income, assets, family size, and number of children enrolled in college. Income is the primary factor and weighs most heavily in the calculation.

Important Things To Understand About EFC and Financial Aid

Before delving into how the EFC affects your college financial planning, there are a few things you must understand about the EFC.

The EFC is only an estimate based on information gleaned from the FAFSA. The number is what the federal government thinks a family can contribute towards the cost of college. This number helps the federal government and your school determine how much need-based federal aid you qualify for.

A family’s EFC does not necessarily equal the amount a family will actually pay out of pocket towards college. After all, the first letter stands for estimate. The amount a family will end up paying may be considerably higher or lower than the estimated EFC.

A student’s status as independent or dependent may also be taken into consideration when calculating EFC.

Not all colleges calculate EFC the same way. Some colleges may require additional information from families to determine the amount of institutional aid a student can receive.

Colleges adjust the EFC calculating formula for inflation every year.

Knowing your EFC is important. Here’s how this number can affect your college financial planning.

The Role of EFC in Your College Financial Planning Strategy

Knowing your EFC can help you estimate what you will pay towards college and how much financial aid you may receive. The lower your family’s EFC, the higher your chances of receiving financial aid. The higher your family’s EFC, the lower your chances of getting need-based financial aid.

If your family’s EFC is high, you know you are less likely to receive aid based on financial need. Start exploring other ways to get much-needed funding towards college, instead of looking for colleges who offer financial aid. If you are academically competitive you may want to consider looking for colleges that offer merit scholarships.

If your family’s EFC is low, you know you have a higher chance of qualifying for financial aid. In this case, it is a better idea to focus on colleges that offer generous need-based aid packages.

Because so many major decisions hinge on your family’s EFC, getting the estimate before you start the college search process is important. Fortunately, you don’t have to wait till you actually fill out the FAFSA. Several websites offer an EFC calculator that help families estimate their EFC. Knowing this number in advance will give you sufficient time to make a solid long term financial plan that works for you.

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