Consider the following information: 36.7% of undergraduate students receive federal loans that average $8,285. Another 42% of undergraduate students receive an estimated $5,179 just in federal grants.
Even more importantly, in a single academic year, it’s reported that $2 billion in federal student grants remain unused by students.
With this amount of federal money in play, it’s more important than ever to understand your EFC for college so you can take every opportunity to benefit from it.
This article covers questions such as “What is EFC?” and explains why you need to know this information as your prepare to pay for your child’s school.
As your child prepares for college, you may find yourself overwhelmed by acronyms and student aid-related terms. If this sounds familiar, you might be wondering, “What is EFC on FAFSA?”. You may also wonder how it applies to your family.
So what is the EFC exactly? EFC stands for Expected Family Contribution. This index number serves as the deciding factor in your child’s federal student financial aid eligibility.
Once you complete the FAFSA form (Free Application for Federal Student Aid), you’ll be assigned an index number. What EFC means to each family is different. For example, benefits, assets, and taxed and untaxed income are all taken into consideration when determining this number.
You can find your EFC on your Student Aid Report (SAR). Log into your FAFSA form, select “View SAR,” and you’ll find your EFC number.
Your EFC is important for schools to determine how much financial aid your child qualifies for. It’s important to remember that, if you need additional funds, there are ways to obtain them. This includes scholarships, so be sure to speak with your child’s school and ask what else you can apply for.
At this point, you may find yourself asking, “What is a low EFC and is it better?”
As a rule of thumb, a low EFC number yields a higher government reward. You complete the FAFSA and schools determine EFC numbers between 0 and 999,999. Once this number is determined, the amount of federal student aid your child qualifies for will be applied the following school year.
If your child’s EFC number is 0, they’re entitled to the maximum dollar amount of student aid available. Any number over 5273, however, receives no student aid. Keep in mind that these numbers are fluid and that the amount of money awarded to families varies from one academic year to the next. The closer your EFC score is to 0, the more student aid money received.
Your EFC meaning correlates to your FAFSA. This means that, in theory, a lower EFC number provides your child with more financial aid. To determine how much financial aid your child needs, subtract your EFC from the cost of attendance (COA) from the school of their choice. COA includes everything your child needs to thrive academically, including tuition, room and board, supplies, books, and transportation.
Using this formula, your child’s school will send you a financial aid package so you know what you’re responsible for and what the federal government pays. This package is called a financial aid offer.
Does this mean that your child should avoid the most expensive school on their list? Not necessarily.
There are instances where an expensive school might be the least expensive for your family.
Never let the price of a school deter your child from applying. The vast majority of students receive some type of scholarship or financial aid. They may also receive work-study or grants, or a combination of everything.
Each school has a total financial aid package and this number is what plays the deciding factor in how much financial assistance your child receives. Remember that your child can also apply for student loans with flexible repayment options that you can assist them with.
Now that you know the answer to the question, “What is EFC FAFSA and how do I find out my number?”, you may be wondering how soon you need to obtain this information.
Ideally, you should try to get your EFC as soon as your child starts looking at colleges. Since your EFC number helps you determine what your out-of-pocket contributions are, the sooner you find out, the better.
If your family’s EFC number is high, your child might want to look at schools that award merit scholarships. These are ideal for academically competitive students. On the other hand, if your family has a low EFC number, you may want to consider schools with considerable need-based aid.
You can also use your EFC number as part of your long-term financial planning solution. Since your EFC is recalculated every year, consider if your financial situation will change at all.
It’s important to also consider if you’ll one day have more children attending college and, if so, how this will impact your EFC. This will also affect how much financial aid a school with offer your child.
When you know your EFC number and understand how it affects your child’s future tuition, you can make changes to lower what you can expect to pay. Your EFC is calculated using information from two years before the academic year your child is applying for, so you’ll have time during that year to reduce your EFC.
Once you complete your FAFSA and have your EFC number, you can work with a financial planner to determine the best way to pay for your child’s college. You can also use this information to consider the best schools for your child’s needs but remember that tuition alone shouldn’t be a deciding factor in where your child attends college.
Most schools offer some type of assistance, so focus on areas of study that interest your child and send them to the best school for their needs. Use your EFC as a guide to help you prepare and save for college and know that help is available throughout your child’s academic journey.
College Funding professionals can help. Learn more about us and how we can help you prepare for your child’s education.