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What is an Expected Family Contribution (EFC) or Student Aid Index?

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The Expected Family Contribution (EFC) is a number calculated by the government and helps determine how much financial aid you could receive for the upcoming academic year. Starting in the 2024-2025 school year, however, the Student Aid Index (SAI) will replace the EFC to reflect the purpose of this tool better.

Here’s what you need to know about the EFC (and SAI) and how they affect your financial aid:

What is an expected family contribution?

The EFC comes from a formula that the Department of Education uses to crunch your family’s financial data and help decide your eligibility for federal financial aid.

Despite its name, the expected family contribution (EFC) isn’t the exact amount your family will pay toward your education — many families end up paying more than the estimated EFC, especially when including student loan interest.

Rather, your EFC is a key factor in calculating your financial aid package. Without it, you can’t receive federal financial assistance to help pay for college.

What is a low expected family contribution?

Your EFC is written as a dollar figure. It could be as little as $0 or as high as your school’s total cost of attendance. And once the SAI replaces the EFC, this number could even be negative, allowing additional aid to cover expenses beyond just the cost of attendance.

In general, you should receive a more substantial financial aid package with a low EFC, whereas a high EFC means you might need to resort to unsubsidized or private student loans to cover costs your family can’t afford.

If you’re a dependent student and your family’s income is below $24,000, your EFC will likely be $0.

Why is the Student Aid Index replacing the Expected Family Contribution?

College financial aid offices have used the EFC for many years to decide how much financial aid you should receive. However, the phrase “expected family contribution” is misleading since it sounds like the exact amount your parents are expected to pay.

The FAFSA Simplification Act, part of the Consolidated Appropriations Act of 2021, wanted a name that adequately reflects the process for determining a student’s federal financial aid.

Ultimately, the Student Aid Index focuses on the student’s complete financial situation, since many students apply for financial aid without parental support. It will also have a slightly different formula, as discussed below.

How is EFC calculated?

The Department of Education uses a set formula to calculate your EFC. It considers all information entered in your Federal Application for Federal Student Aid (FAFSA), such as family size, income and assets, plus how many family members plan to attend college in the coming year.

You’ll receive a Student Aid Report after submitting your FAFSA, which will show your EFC. You can access this report through your studentaid.gov account by clicking “View SAR.”

If you want to get a sense of what your EFC might be, you can use the government’s Federal Student Aid Estimator tool for a rough idea.

How will calculations work for the Student Aid Index?

Most of the EFC’s original formula will remain the same when it transitions to the SAI for the 2024-2025 academic year. However, the National Association of Student Financial Aid Administrators has announced a few fundamental changes:

  • SAI will base Pell Grant awards more heavily on a student’s dependency status, among other household factors. This means that lower-income students, independent or otherwise, will likely have access to higher grant amounts once the Student Aid Index is in place.
  • SAI won't give the same break that EFC has afforded to families with multiple children enrolled in college simultaneously. As a result, if you have two children in college by 2024, you could potentially receive less federal financial aid than you would have in 2023.

How does EFC affect my financial aid?

Your college’s financial aid department subtracts your EFC from the school’s total cost of attendance (COA) to determine your financial aid package for the coming year:

COA – EFC = Financial need

For example, if your college’s total COA is $30,000 and your EFC is $12,000, you could expect to receive up to $18,000 in need-based aid, such as Pell Grants, subsidized loans and work-study programs.

COA includes tuition, books and supplies, and room and board — although you might need more funds based on personal or unexpected expenses. Keep in mind that your need-based aid can’t exceed your financial need, as determined by the above formula. In addition, only some schools meet 100% of your financial need.

Don’t forget that financial aid is often first-come, first-served, so you could receive a lower amount if you wait until the last minute to submit your FAFSA. For this reason, keep an eye on the FAFSA deadline and try to submit early.

If your aid package falls short, you can appeal to request more aid or fill any remaining gaps with other types of federal assistance, such as unsubsidized loans and parent PLUS loans. Wait to exhaust all federal loan options before considering private student loans since federal loans typically offer lower interest rates, income-driven repayment plans and access to student loan forgiveness programs.

What happens if my financial situation changes?

It’s possible for your financial situation or dependency status to drastically change after filing your FAFSA. For example, a parent could lose a job, fall ill or have another child, all of which could change your EFC.

If your current situation doesn’t match your most recent tax return, still follow the steps outlined in the FAFSA application, including using the IRS Data Retrieval Tool. Afterward, contact your school’s financial aid office to explain the situation.

You may need to start an appeal process — called professional judgment — to have your EFC and financial aid adjusted if you’ve already received a financial aid package. Begin by reaching out to your financial aid advisor, who can assist you with the next steps. Hopefully your school can accommodate your new circumstances, although receiving additional aid isn’t guaranteed.

Remember, you can always apply for scholarships to help cover any gaps in financial aid.

 

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