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If you’re looking to attend college, there’s a good chance that you might need financial aid. An important factor that determines student loan eligibility is the Expected Family Contribution (EFC). Let’s find out how to calculate EFC.

What is the EFC and how is it used?

When you fill out your Free Application for Federal Student Aid (FAFSA), the colleges you’ve applied to receive specific data in order to determine your financial aid status. Part of the calculation includes estimating how much your family can contribute to the cost of schooling. This is referred to as the EFC, and the main component of the EFC is family income.

It’s important to remember that the EFC is not how much you’ll be paying for school and it’s not how much financial aid you’ll receive. Rather, the EFC is an index that schools use to determine your financial need.

A low EFC means your family can’t pay so much for college and that you potentially qualify for more financial aid.

What are sources of income used in EFC calculation?

The EFC takes into account nearly all sources of income, not just wages. Other sources to keep in mind are:

  • Social Security benefits
  • Combat pay
  • Education savings accounts
  • Trust funds
  • Money market funds
  • Stocks, bonds, and commodities
  • Rental income
  • Welfare and unemployment benefits

Any debt on investments can be deducted from the investment value when calculating the EFC. Some things that are not included in the EFC calculation are personal home values, insurance policies, and retirement accounts.

IRA rollovers and pensions

Families who rolled over an Individual Retirement Account (IRA) or pension plan in 2016 should be aware that the amount rolled over may have mistakenly been counted as income when they filled out the 2018-2019 FAFSA. Such errors can inflate EFC, reducing the amount of aid they qualified for. Families who suspect such an error has occurred are advised to contact the financial aid office of any colleges that received their FAFSA to correct the issue.

How do colleges use the EFC?

The EFC is used by college financial aid offices to calculate your financial need. First of all, they take into account your cost of attendance (COA). The COA is based on:

  • School tuition and fees
  • Room and board costs
  • Estimated cost of books, supplies, transportation, borrowing fees, and other expenses
  • Child care if needed
  • Disability costs if needed
  • Study abroad costs if needed

Once the total COA is calculated, your financial need is determined by this formula:

  • COA – EFC = Financial Need

Do any other factors affect EFC calculation?

The number of students in a household attending college can affect the EFC calculation. The more students enrolled, the lower the EFC and the more financial aid you may receive.

Is credit card or student loan debt included in the EFC calculation?

Credit card and some other types of debt do not get figured into EFC calculation. Other student loans and personal loans are not taken into account either.

If my EFC is low, will I get more aid?

Technically speaking, if your EFC is low, your financial need is higher. This does not mean, though, that you will receive enough financial aid to cover all your higher education costs. The federal government and each school have their limits on lending. If you still need more aid, you might have to look at private lenders to make up the difference. Services like Credible can help you explore your student loan options.

Where can I get more information about EFC?

The Federal Student Aid website has more information about the EFC. The complete form for calculating the EFC can be downloaded from the site, or you can download it here. The College Board also offers an online EFC calculator.

To learn more about your private student loan options, visit Credible

We encourage you to provide honest and thorough feedback about your experience (not the experiences you’ve heard from other people), the good as well as the bad. But, we also want you to follow these content guidelines. The comments or responses that Credible posts under its official account are not provided, reviewed or endorsed by any of the financial institutions unless specifically stated otherwise in the response. Please keep in mind that the financial institution has no obligation to monitor any comments, questions or reviews you post and is therefore not responsible for ensuring your posts and/or questions are answered.

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