EFC for FAFSA: What it is and how to calculate it

Numerous calculations determine the cost of college for a student. Luckily, you don’t need to crunch any numbers, but you should understand where the numbers are coming from.

Perhaps the most important number to understand is your Expected Family Contribution.

What is the EFC?

The EFC is the number that results from filling out your FAFSA. (Get info on FAFSA here.) According to the FAFSA official site, “The Expected Family Contribution (EFC) is a measure of your family’s financial strength, and is calculated according to a formula established by law” The EFC will be expressed as number equivalent to a dollar amount. For example, 12000 is $12,000. This means that the federal government (and colleges) expect your family to be able to reasonably contribute $12,000 per year towards your college expenses.

That said, the EFC number is not the definitive amount your family must pay for school. Rather, the number is a starting point. From this starting point, financial aid and grant providers (normally, the federal government, state government, and your college) will calculate what kind of aid you should receive. 

For example, the federal government uses the EFC to determine your eligibility for Federal Pell Grants, Subsidized Direct Loans, Federal Supplemental Educational Opportunity Grants (FSEOG), and Federal Work-Study (FWS).

Of course, there are also other kinds of aid, like merit scholarships and outside scholarships, which generally don’t take into account financial need (and thus don’t look at your EFC). For a full run-down of student aid, check out our comprehensive guide.

The Expected Family Contribution Formula

Your EFC is calculated using information you’ve provided in your FAFSA information. It will take into account factors like your household income and the number of family members (including current college students!) that this income must support. It will not take into account consumer debt, such as credit card balances and auto loans. Therefore, having credit card debt, mortgage debt, or the like will not increase chances of a more favorable EFC number. If you are unsure about how to answer certain FAFSA questions, check out our tips to approach tricky questions.

The federal government then takes your answers, and calculates your EFC according to a complicated EFC formula. To get into the real nitty-gritty, look for “The EFC Formula” PDF guide/link here.

Also note that EFC is based on the recent year’s income. Therefore, your EFC could change from year to year. This is especially true in cases where the person in charge of income falls ill suddenly or becomes unemployed. This is why you must fill out and re-submit your FAFSA every year, so that your EFC can be re-calculated. 

Simplified Needs Test

That said, there are actually two EFC formulas: the normal one and the “simplified” one.

Generally, the simplified EFC formula is for low-income families (earning $49,999 or below) who currently also benefit from other federal assistance programs (like Medicaid, the Supplemental Security Income Program, or the Free & Reduced Price School Lunch Program).

If you do qualify, the system will exclude household assets from the calculation of your EFC number. This generally means your household will be seen to have fewer financial resources, so your EFC will be lower, and your eligible aid package will be higher. (In other words: if you qualify for the simple EFC, you’ll likely get more financial aid!)

Need-Based Financial Aid

The EFC number will be located on the top-right of the Student Aid Report (SAR) you receive, either electronically or physically, a few weeks after filing your FAFSA. This same SAR is sent to every school you list as a recipient on your FAFSA. (Unlike the CSS Profile, it’s free to send your FAFSA SAR to as many schools as you want.) 

[Side note: Some schools may require you to fill out other financial aid forms, in addition to the FAFSA. The most popular of these is the CSS Profile, but some colleges have their own forms, which they’ll list on their financial aid websites.]

Each school considers your EFC to calculate how much federal student aid you are eligible for. More specifically, schools need the EFC number to calculate an equation measuring your “financial need” for the school year. The schools perform the following equation: Cost of Attendance (COA) minus Expected Family Contribution (EFC) equals the amount of Financial Need.

COA minus EFC equals financial need

Defining Cost of Attendance and Financial Need

Your “Cost of Attendance” takes into account all costs associated with studying at the university, not just tuition. The COA will often include room and board (that is, accommodation and meals), textbooks, student fees, and transportation.

Your “Financial need” is the “gap” between what college will cost and what your family can pay. Usually, colleges will try to close that gap by providing you with a financial aid package consisting of grants, loans, and work-study. The maximum amount of financial aid you can receive is this “financial need” amount, so no school will offer you more need-based aid than your Financial Need, but depending on the school, they may offer you less.

Example calculations

Here are three examples of how this calculation will work:

  1. Imagine your EFC is $15,000. At a school where the COA is $30,000, your calculated financial need is $30,000 (COA) – $15,000 (EFC) = $15,000 (Financial Need).
  2. Imagine your EFC is $22,000. At a school where the COA is $30,000, your calculated financial need is $30,000 (COA) – $22,000 (EFC) = $8,000 (Financial Need).
  3. Imagine your EFC is $22,000, but now you’re attending a school where the COA is $18,000. Since your EFC is greater than your COA, your calculated financial need is $0, and you would not receive any financial aid. (Your family can afford to pay more than the college costs.)

As you can tell, given the same COA, a lower EFC generally means more financial aid. However, it’s all relative, since these numbers are in relation to each other.

Options Beyond Need-Based Financial Aid

Some schools or organizations also offer financial aid that is not need-based, to provide further financial assistance.

Schools use the following formula to calculate this aid: Cost of Attendance (COA) minus Financial Aid Awarded So Far equals Eligibility for Non-need-based Aid.

In other words, your eligibility is based on the amount remaining, after receiving need-based aid, scholarships, and grants. Direct Unsubsidized Loans and Federal PLUS Loans are two forms of non-need-based financial aid. Your EFC is not considered here.

Another option is external scholarships (also known as “outside scholarships”) provided by independent third parties, like foundations or companies. Many of these scholarships have no household income requirement and are open to all kinds of families, not just low-income ones. Going Merry is your best source to find those external scholarships.

What if your Expected Family Contribution is zero?

A student’s EFC can be zero. This means that, given your family’s financial situation, they would not be able to contribute anything towards your college education. 

If your EFC is zero, the number on your SAR will appear as multiple zeros in a row. Tip: A person or household making less than $25,000 and filing a 1040 or 1040EZ tax return automatically has an EFC of zero.

Having an EFC of zero does not mean the school will cover the complete cost of attendance (which, in your case, equals your financial need). Many schools can only cover 50-60% of the financial need for each student. After the amount your school is covering is subtracted, the remaining amount is called unmet need. The student or student’s family is responsible for finding money for this unmet need.

Closing the gap: Unmet financial need

Pretend for a moment that your EFC is $19,000 and your financial need is calculated to be $8,000. Your school offers you $4,000 of need-based financial aid. This leaves $4,000 of unmet need. Consequently, the family needs to manage funds to cover $23,000 (EFC plus unmet need).

One great way to help with this is to apply for outside scholarships. Many times, these scholarships are granted to students based on merit (academic or athletic) and/or based on scholarship essays. Going Merry is a great way to find and apply for outside scholarships efficiently. Sign up for an account here, or read about how it all works.

The Broader Picture: Comparing Financial Aid Offers

Once you receive your college admissions letters (go you!) and their associated financial aid offers, we recommend that you calculate and compare your unmet need at each school. We also recommend that you consider what percentage of your aid package is loans (that you have to pay back) vs. grants (free money).

Remember that the more expensive college (based on listed tuition costs) may actually still be more affordable for you, if they offer you a more generous aid package.

For example:

  • School A costs $45,000 (this is their COA). They meet “full financial need.” So based on your EFC of $15,000, they offer you $30,000 in need-based aid. Therefore, your effective cost would be $45,000 – $30,000 = $15,000. Your unmet need is $0.
  • School B costs $30,000 (this is their COA). Based on your EFC of $15,000, they offer you $10,000 in need-based aid. (They do not meet full financial need.) Therefore, your effective cost would be $30,000 – $10,000 = $20,000. Your unmet need is $5,000.

High school sophomore or junior? Start thinking about college affordability now.

You don’t have to wait for senior year (much less senior spring) to start thinking about your financial aid offers. We recommend you start early to make sure college is affordable:

  1. Apply for outside scholarships. There are many external scholarships that all high school students are eligible for. Sign up for Going Merry to fill out a brief profile and get matched to scholarships you can apply for.
  2. Research your college list. Start researching colleges you’re interested in, including their financial aid policies. Some colleges have really generous merit scholarship programs.

Feeling better about financial aid? Sign up for a free Going Merry profile so we can match you with the best outside scholarships. It’s free and takes less than a minute!

Shalon B

Ready to find scholarships that are a match for you?