Understand how to review and compare financial aid offers to determine the amount of money you'll need to pay for college. Learn more about financial aid offers. So what is an EFC?
Related topics. Compare financial aid offers Understand how to review and compare financial aid offers to determine the amount of money you'll need to pay for college. No purchase necessary. The less financial aid you get, the more you will have to cover with savings or student loans. Colleges may also use their own institutional methodology when determining a financial aid award. This table summarizes the impact of the primary financial and demographic questions on the EFC.
Knowing your estimated expected family contribution and how much you will need to pay out of pocket will help you decide if you need to take out a student loan. This will help determine the overall college cost. FAFSA simplification is scheduled to begin for the award year and continue through Other significant changes will include:. By Mark Kantrowitz June 9, The EFC is a mysterious six-digit number, that may include leading zeros.
Examples of federal need-based financial aid include: Subsidized federal student loans Unsubsidized federal student loans Grants Work-study A lower EFC will yield more federal financial aid. Financial need increases with decreases in the EFC and increases in the cost of attendance. Questions Impact on the EFC Parent Income Allowances for taxes and basic living expenses are subtracted from total parent income to yield available income. Institutions use a student's EFC as a barometer for a student's financial need.
Within the COA , schools calculate:. Institutions that offer grants sometimes use the Pell grant chart or they use a similar EFC chart system to determine eligibility for school-specific grants, but these factors vary at each school.
A common practice, however, is to award a flat amount for each student who has enough financial need to qualify for their need-based grant. The following are a few examples of how a school might use your EFC to determine your total financial aid award. It's important to note that your EFC code generally does not affect merit awards. Merit awards are given based on talent in the arts, athletics or academics. However, merit awards may be factored into a student's financial aid package.
In addition, depending on the merit awards available, a school may forego a need-based grant in favor of a higher merit-based scholarship. However, this typically won't affect the bottom line, it's just a matter of the school pulling money from different resources. The following examples below show how a school may look at your EFC to complete your financial aid package.
These examples assume that the student is a dependent and going to school full time. The following examples assume the students are dependents who are first-year students going to school full time. They also assume that the formula the school uses to determine institution-based grants is similar to the Pell grant chart and that anyone who qualifies for need will get it. While tuition at this school is not high, the school has few resources to give students merit or school-based grants.
The following examples are how a school might use a student's EFC Code. For example, this student is eligible for:. Note: These numbers are arbitrary to give you an idea of how a college might award financial aid.
They may do this out-of-pocket many colleges have payment plans , using outside scholarships or by taking out a loan. A student with an EFC at the same college is still eligible for some financial aid from the federal government:.
The school gives a flat need-based grant to everyone who is eligible for federal financial aid. In addition, the school adds merit aid to the student's package.
While this school has a more expensive sticker price, some families may find that it's actually cheaper than going to a school that doesn't necessarily have the resources to help students out financially.
A school with moderate resources may be able to give more in merit aid or need-based grants. What happens when a student's EFC is too high to get a Pell grant? While families can expect to pay more out-of-pocket, a school with moderate resources may still be able to offset some of the cost of attendance. For example, this student's financial aid package could look like this:.
This is the amount her family might have to pay out of pocket. Note: as the EFC gets higher, the first aid type to disappear is the Pell Grant, followed by the Subsidized Loan, followed by any need-based grant or loan offered by the school.
This is a common pattern, though every financial aid award will vary. In this scenario, the school has the budget to award a large need-based grant, loan and a large merit-based scholarship. In addition, they have funds to attract top students in various fields to help round out the campus.
Consequently, they consider more than just the EFC while deciding on awards, and make a point to offer generous merit-based grants to worthy students.
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