EFC: How Your Expected Family Contribution Affects Financial Aid

Your school’s financial aid office will use your Expected Family Contribution (EFC) to determine how much need-based financial aid you qualify for.

By Angela Brown

Written by

Angela Brown

Editor

Angela Brown is a student loan, personal finance, and real estate authority and a contributor to Credible. Her work has appeared in Fox Business, LendingTree, FinanceBuzz, and Yahoo Finance.

Updated April 6, 2023

Edited by Ashley Harrison

Written by

Ashley Harrison

Editor

Ashley Harrison is a Credible authority on personal finance who enjoys helping people become debt-free.

Editorial disclosure: Our goal is to give you the tools and confidence you need to improve your finances.

Filling out the Free Application for Federal Student Aid (FAFSA) for the first time can feel overwhelming. One way to lessen this confusion is to learn how your FAFSA results are used to determine the federal financial aid you qualify for — such as understanding how your Expected Family Contribution (EFC) is calculated and what it means.

Here’s what to know about about the Expected Family Contribution when paying for college:

Your Expected Family Contribution is calculated based on your FAFSA information and is used by financial aid offices to determine how much federal financial aid you qualify for. Keep in mind that your EFC isn’t the amount of money your family will be expected to provide for your education or your exact federal financial aid amount — it’s simply part of the equation.

How is your EFC calculated? There are three formulas used to calculated EFC:
• Formula A for dependent students
• Formula B for independent students without dependents other than a spouse
• Formula C for independent students with dependents other than a spouse
You can find the worksheets used to determine EFC on the Federal Student Aid Partner Connect website. Don’t worry — because you have to complete the FAFSA to get your official EFC anyway, you don’t have to figure out your EFC manually using the worksheets.

Once your EFC has been calculated, your school’s financial aid office will subtract it from your cost of attendance — this number is how much you qualify for in need-based aid. They’ll then subtract any need-based financial aid you’re awarded from your cost of attendance to determine what non-need-based aid you’re eligible for.

Keep in mind: Your school’s cost of attendance is based on several factors, including tuition, fees, room and board, books, supplies, transportation, and other basic living expenses.

## What factors determine your EFC?

The information you provide in the FAFSA is used to determine your EFC. Here are a few of these factors as well as how they’re typically weighted in the calculation for dependent students:

Program

Weight

Excluded income

Student income
50%
\$6,750
Parent income
22% to 44%
Varies based on the number of dependents and number of students in college
Student assets
20%
529 plans in student’s name before disbursement (disbursements and 529 plans in someone’s else name are considered student income)
Parent assets
2.6% to 5.64%
529 plans in parent’s name before disbursement (disbursements and 529 plans in someone’s else name are considered student income)
Keep in mind: If you’re an independent student, your parent’s income and assets won’t be considered for the EFC. This means you might qualify for more financial aid as an independent student than as a dependent student.

## How much financial aid will you get based on your EFC?

This will mainly depend on your school’s cost of attendance: Your school’s financial aid office will subtract your EFC from the cost of attendance to determine your financial need. This number is also the maximum amount you can receive in need-based aid — though you might be able to get more in non-need-based aid.

Keep in mind that students who come from households with a low adjusted gross income (AGI) will generally have a lower EFC compared to students from wealthy families. This means low-income students will often be eligible for more financial aid.

For example: Say your EFC is \$15,000 and your school’s cost of attendance is \$40,000. With this EFC, your calculated financial need would be \$25,000. But if you had a higher EFC of \$30,000, your financial need would be only \$10,000.

## Need-based vs. non-need-based aid: what’s the difference?

There are two categories of federal financial aid — need-based and non-need-based aid. Learning the difference between the two can help you better understand your financial aid package and the role of your EFC.

Here’s how they work:

### Need-based aid

You must have financial need as well as meet other requirements to qualify for need-based aid. To calculate your financial need, your school will subtract your EFC from your cost of attendance. Your financial need is also the maximum amount of need-based aid you can get.

For example: Say your school’s cost of attendance is \$20,000 and your EFC is \$8,000. In this case, your financial need would be \$12,000 — this would also be the maximum you could get in need-based aid.

There are four types of need-based federal aid, including:

• Federal Pell Grants: These are awarded to undergraduate students who demonstrate exceptional financial need. Unlike student loans, Pell Grants don’t have to be repaid.
• FSEOG: The Federal Supplemental Educational Opportunity Grant (FSEOG) program is only offered by participating schools. You can check with your school’s financial aid office to see if the FSEOG is available to you.
• Direct Subsidized Loans: These are available to undergraduate students with financial need. The government will cover the interest that accrues on these loans while you’re in school.
• Federal Work-Study: Undergraduate and graduate students with financial need can get part-time jobs through this program.

### Non-need-based aid

Unlike with need-based aid, your EFC doesn’t factor into your eligibility for non-need-based aid. Instead, your school’s financial aid office will subtract the financial aid you’ve been awarded so far (such as school-based aid and private scholarships) from your cost of attendance — this number is how much you qualify for in non-need-based aid.

For example: Say your cost of attendance is \$20,000. If you’ve already received \$12,000 in need-based aid, you might qualify for up to \$8,000 in non-need-based aid.

There are three types of non-need-based aid, including:

• Direct Unsubsidized Loans: These are available to both undergraduate and graduate students. Unlike with subsidized loans, you’re responsible for all of the interest that accrues on unsubsidized loans.
• Direct PLUS Loans: There are two kinds of PLUS Loan — Grad PLUS Loans for graduate students and Parent PLUS Loans for parents who want to pay for their child’s education. The interest rates on these loans are higher compared to most other federal loans. PLUS Loans also require a credit check.
• TEACH Grant: To be eligible for a Teacher Education Assistance for College and Higher Education (TEACH) Grant, you must agree to serve as a full-time, highly-qualified teacher at a low-income school or educational service agency for four years. Additionally, you must teach in a high-need field.

## How to appeal your EFC

After you submit the FAFSA, your school will send you a financial aid award letter detailing the financial aid you qualify for. However, if your financial situation changes, you might be able to appeal your EFC or get additional help from your school if your financial situation changes — for example, if you’re faced with a death in the family, a serious illness, job loss, or divorce.

1. Contact the financial aid office. Some schools have specific funds set aside for students with an unexpected financial need or have resources to help you make up the difference between your family’s ability to pay and your education costs. Ask your school’s financial aid office what help is available for you.
2. Request more financial aid. This will also be done through the financial aid office. Make sure to include information on how your circumstances changed and how much additional aid you need.

## The Student Aid Index will replace the EFC in 2023

As part of the FAFSA Simplification Act, the EFC will be replaced with the Student Aid Index (SAI) starting on July 1, 2023. The main reason for this change is to reduce the confusion surrounding the term “Expected Family Contribution” — this is often mistaken to mean either the amount your family has to come up with to support your education or the amount of federal aid you’ll get.

Updating this system is expected to help clear up these misunderstandings as well as highlight how this number is actually used — as a part of financial aid calculations.

In addition to changing the name, some of the ways that the SAI will change the current EFC system include:
• Fewer questions: The FAFSA will have a maximum of 36 questions instead of the current 108 with the EFC system. Low-income families will have the fewest questions to answer.
• Pell Grant eligibility: You’ll be able to see if you qualify for a Pell Grant before applying.
• Suspension eliminations: Students will no longer need to answer questions regarding drug-related convictions or Selective Service System registration.
• Asset information: In some cases, assets won’t be considered in financial aid calculations for low-income students and parents.
• Range: With the EFC, the lowest number you can qualify for is \$0. But with the SAI, the lowest number will be -\$1,500 — which means you could receive more aid to cover other expenses outside of the school’s cost of attendance.
• Special circumstances: Financial aid officers will have the power to adjust the cost of attendance or components of the SAI on a case-by-case basis. This means that students facing exceptional circumstances might be able to get more aid.
Learn More: Federal Direct Plus Student Loans: What to Know Before Borrowing

## Consider private student loans to fill in the financial gaps

If your federal financial aid isn’t enough to cover your school costs, private student loans could help fill the gap. While private student loans don’t offer the same benefits and protections that federal student loans do, they can be an important part of paying for school.

Before taking out a private student loan, be sure to shop around and consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can see your prequalified rates from our partner lenders in the table below in just two minutes.

Lender

Fixed (APR)

Loan Term

0

Credible rating

4.48%+

5.98%+

5, 7, 10, 12, 15, 20 yrs

• Fixed rates from (APR): 4.48%+
• Variable rates from (APR): 5.98%+
• Repayment terms (years): 5, 7, 10, 12, 15, 20
• Min. credit score: Does not disclose
• Loan amount: \$2,001 - \$400,000
• Repayment options: Full deferral, fixed/flat repayment, interest only, academic deferment, military deferment, forbearance, loans discharged upon death or disability
• Fees: None
• Discounts: 0.25% to 1.00% automatic payment discount, 1% cash back graduation reward
• Eligibility: Must be a U.S. citizen or permanent resident or DACA student enrolled at least half-time in a degree-seeking program
• Customer service: Email, phone
• Soft credit check: Yes
• Cosigner release: After 24 months
• Loan servicer: Launch Servicing, LLC

0

Credible rating

4.43%+

6.02%+

5, 10, 15 yrs

• Fixed rates from (APR): 4.43%+
• Variable rates from (APR): 6.02%+
• Repayment terms (years): 5, 10, 15
• Min. credit score: 720
• >
• Loan amount: \$1,000 - \$350,000 (depending on degree)
• Repayment options: Full deferral, full monthly payment, interest only, immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability
• Fees: Late fee
• Discounts: Autopay, loyalty
• Eligibility: Available in all 50 states (international students can apply with a creditworthy U.S. citizen or permanent resident cosigner)
• Customer service: Email, phone, chat
• Soft credit check: Yes
• Cosigner release: After 36 months
• Loan servicer: Firstmark Services

0

Credible rating

4.44%+

5.09%+

5, 8, 10, 15, 20 yrs

• Fixed rates from (APR): 4.44%+
• Variable rates from (APR): 5.09%+
• Repayment terms (years): 5, 8, 10, 15, 20
• Min. credit score: Does not disclose
• Loan amount: \$1,000 up to 100% of the school-certified cost of attendance
• Repayment options: Full deferral, full monthly payment, fixed/flat repayment, interest only, immediate repayment, academic deferment, forbearance, loans discharged upon death or disability
• Fees: Late fee
• Discounts: Autopay
• Eligibility: Must be a U.S. citizen or permanent resident and be making satisfactory academic progress.
• Customer service: Email, phone
• Soft credit check: Yes
• Cosigner release: After 24 months
• Loan servicer: University Accounting Service LLC

0

Credible rating

3.65%+

6.14%+

7, 10, 15 yrs

• Fixed rates from (APR): 3.65%+
• Variable rates from (APR): 6.14%+
• Repayment terms (years): 7, 10, 15
• Min. credit score: Does not disclose
• Loan amount: \$1,000 to \$99,999 annually (\$180,000 aggregate limit)
• Repayment options: Full deferral, immediate repayment, interest-only repayment, flat/full repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability
• Fees: None
• Discounts: Autopay
• Eligibility: Must be a U.S. citizen or permanent resident
• Customer service: Email, phone
• Soft credit check: Yes
• Min. income: Does not disclose
• Cosigner release: After 36 months
• Loan servicer: American Education Services

0

Credible rating

7.00%+

7.79%+

7, 10, 15 yrs

• Fixed rates from (APR): 7.00%+
• Variable rates from (APR): 7.79%+
• Repayment terms (years): 7, 10, 15
• Min. credit score: 750
• Loan amount: \$1,000 - \$200,000
• Repayment options: Full deferral, full monthly payment, interest only, immediate repayment, academic deferment, loans discharged upon death or disability
• Fees: Late fee
• Discounts: Autopay
• Eligibility: Must be a U.S. citizen or permanent resident and have a minimum income of \$30,000.
• Customer service: Email, phone
• Soft credit check: Yes
• Cosigner release: After 36 months
• Loan servicer: Granite State Management & Resources (GSM&R)

0

Credible rating

4.37%+

6.85%+

5, 10, 15 yrs

• Fixed rates from (APR): 4.37%+
• Variable rates from (APR): 6.85%+
• Repayment terms (years): 5, 10, 15
• Min. credit score: 670
• Loan amount: \$1,001 up to 100% of school certified cost of attendance
• Repayment options: Full deferral, full monthly payment, interest only, immediate repayment, academic deferment, forbearance
• Fees: Late fee
• Discounts: Autopay, reward for on-time graduation
• Eligibility: Must be an Indiana resident or a U.S. citizen attending an eligible Indiana school
• Customer service: Email, phone, chat
• Soft credit check: Yes
• Cosigner release: After 48 months
• Loan servicer: American Education Services

0

Credible rating

4.89%+

N/A

10, 15 yrs

• Fixed rates from (APR): 4.89%+
• Variable rates from (APR): N/A
• Repayment terms (years): 10, 15
• Min. credit score: 670
• Loan amount: \$1,500 or \$2,000 up to school’s certified cost of attendance (depending on school type and minus other aid received)
• Repayment options: Full deferral, interest only, immediate repayment
• Fees: None
• Discounts: None
• Eligibility: Must be a U.S. citizen or permanent resident and be making satisfactory academic progress.
• Customer service: Email, phone
• Soft credit check: Yes
• Cosigner release: After 48 months
• Loan servicer: American Education Services (AES)

0

Credible rating

4.50%+

5.99%+

5 - 10 yrs

• Fixed rates from (APR): 4.50%+
• Variable rates from (APR): 5.99%+
• Repayment terms (years): 5 - 10
• Min. credit score: Does not disclose
• Loan amount: \$1,000 up to 100% of school-certified cost of attendance

• Repayment options: Full deferral, fixed/flat repayment, interest only, academic deferment, forbearance, loans discharged upon death or disability
• Fees: Late fee
• Discounts: Autopay
• Eligibility: Must be a U.S. citizen or permanent resident. Also available to non-U.S. citizen students (including DACA students) attending a school located in the U.S. who apply with a qualifying cosigner.
• Customer service: Phone
• Soft credit check: Yes
• Cosigner release: After 12 months
• Loan servicer: Sallie Mae

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Meet the expert: Angela Brown

Angela Brown is a student loan, personal finance, and real estate authority and a contributor to Credible. Her work has appeared in Fox Business, LendingTree, FinanceBuzz, and Yahoo Finance.

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