How is the Expected Family Contribution (EFC) calculated?

The Expected Family Contribution, or EFC, is a vital figure in determining a student's financial aid eligibility for college and is calculated based on the information provided in the Free Application for Federal Student Aid, commonly referred to as FAFSA. This calculation takes into account the family's financial situation, including income, assets, and household size. To determine the EFC, certain formulas are used, which factor in the family's income, both taxed and untaxed, along with assets such as savings accounts, stocks, and real estate. The calculation also considers the number of family members who will be attending college during the academic year. Notably, this means that the costs and contributions are divided by the number of students, potentially lowering the EFC for each individual. The EFC is further categorized into two components: the Parent Contribution and the Student Contribution. The Parent Contribution is calculated primarily on the parents’ income and assets, while the Student Contribution is based on the student's income and assets. The U.S. Department of Education utilizes this calculated EFC to determine the amount of financial aid a student may receive. It is essential to understand that a lower EFC often qualifies students for more need-based aid, including federal grants and loans. For more detailed information about the calculations and any updates relevant to the EFC, interested individuals can visit studentaid.gov to explore the current resources and guidelines.