Your Guide to Expected Family Contribution

The constantly rising cost of college is intimidating, and many families will assume that there’s no way they could pay for a college education out of their own pocket. Since this is true⎯very few folks can pay for college these days without financial assistance⎯most families assume that they’ll be eligible for some type of financial assistance that could help them pay for school.

Unfortunately, there are limited funds available to help students pay for school, and financial aid officers need a way to categorize applicants who have different levels of financial need. The expected family contribution (EFC) figure is designed to help.

A Formal Definition

large-green-bullet Expected Family Contribution (EFC):

The U.S. Department of Education defines EFC as, “An index number that college financial aid staff use to determine how much financial aid you would receive if you were to attend their school.” Video: What Does EFC Mean?

Families can’t simply take a guess about what their EFC might be, and they can’t claim that their EFC is zero because they’d rather not pay for education.

Instead families must follow this series of steps in order to determine their EFC:

Step 1

Compile all of your family’s household financial data

Step 3

Submit your FAFSA and wait for results of your EFC figure

The U.S. Department of Education reviews the FAFSA and provides families with their EFC. That data is also shared with the schools the students choose to attend, if the applicant in question is a freshman. Otherwise, the data is only shared with the student’s college or university.

Factors That Influence EFC

If an EFC documents a family’s ability to pay for a student’s education, there are a number of variables that might influence the amount of money the family has available.

Of these variables, income is the most obvious, and deviations from the median income of $51,017 in 2012 could indicate an increased or decreased need for aid.

Income means more than a paycheck, however, and some families may be shocked to find that money coming from Social Security benefits, combat pay, and even contributions to retirement accounts also counts as income. Families in need might also have unpleasant surprises in the income arena. In fact, families struggling to find employment may need of help paying for household expenses and for college, but they still must report their unemployment benefits as income.

Investment Mix
A family’s investments are also included in the mix, as some families might be able to tap into the value of the things they own in order to pay a big tuition bill. Common investments include:

  • Education savings accounts
  • Trust funds
  • Money market funds
  • Stocks
  • Bonds
  • Rental property
  • Commodities

The Scholarship Center

investment-incomeThe typical equation to follow for all investments takes the present market value of the investment and subtracts any debt on the specific investment in order to determine the value that must be reported on the FAFSA.

Figures involving income and investments can deeply influence an EFC, but the amount of money a family can contribute might also be heavily influenced by the number of students in a household attending school in any given year.

While many families have only one child to send to college, those with multiple students in their midst could see their EFC drop as a result.



Factors That Do Not Count

While obtaining an EFC means providing scads of data about a family’s monetary health and financial characteristics, the final figure isn’t a true representation of a family’s ability to pay for school, as there are many types of financial burdens that simply don’t apply. Household unsecured debt like credit cards and payday loans aren’t included, and that could be a huge burden on a family’s budget.

Debt Not Included
Credit Cards


Payday Loans


Previous Student Loans


Personal/Signature Loans


This kind of debt can’t be counted against an investment, and there are no fields on the FAFSA in which to fill in a family’s debt load. Those families with high debt might be significantly impaired as a result.

Similarly, the cost of the school the student chooses to attend is also not included in EFC calculations, and this figure can vary dramatically depending on the choices a student makes.

The higher the cost of a specific school does not affect the EFC. Instead the amount only determines financial need.

Cost of attendance – Expected Family Contribution
= Financial Need.

Because the amount of free money sources and other need-based financial aid may be limited, many high-cost schools can’t cover all the families’ EFC.

On the plus side, there are some types of financial data that don’t appear in the FAFSA. For example, when asked to list investments, some families might be tempted to put the value of their homes on the line. For most families, this is the largest investment they have.

Why Does This Matter?

Students and their parents have so much to worry about as they prepare for the college journey to begin, and some might wonder if issues of the EFC are even worth bothering over. In fact, many students seem to make financial choices regarding their education without determining their EFC at all.

According to the College Board, 54% of college students look at overall costs, without financial aid, when choosing a school.

Use Your EFC to Help Determine School to Attend
It might be wiser for students to determine their EFC in advance, and then use that number to help determine what schools they might be able to afford with aid. EFC calculators, such as this one by AidCalc, might help students to make more informed, and more valuable, choices about their educations. For example:
Using The Net Price Calculator (NPC)
In addition, consider using net price calculators (NPC) at each school’s website to help you project how much you will pay out of pocket. To find the calculator for a specific school, check out College Navigator search. You can look up the school by name or state or school type, and then find the link to their net price calculator under general information.

Knowing your EFC can help you to make decisions that are in line with your financial means and goals. If you’re trying to plan ahead about how to cover college costs, having even a rough sense for your EFC will make you more as you apply for financial aid packages and student loans, if you need them.