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Does Your EFC Have You Concerned?

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Does Your EFC Have You Concerned?Once you submit your FAFSA, the next step is receiving a Student Aid Report, or SAR. If your application is complete and fully processed, an EFC (Expected Family Contribution) will display in the upper right-hand corner on the first page of your SAR. On the electronic SAR, the EFC is located in the “Processing Results” tab. If your application is incomplete, your SAR will not include an EFC, but it will tell you what you need to do to resolve any issues in the “What You Must Do Now” section of your SAR in the “FAFSA Data” tab.

The EFC is an index number calculated using your FAFSA information and a formula specified by law. It represents what the federal government thinks your family can afford to pay for your student’s college education. For some students, this number might even be zero. Your eligibility for federal student aid depends on the EFC, as well as your year in school, your enrollment status, and the cost of attendance at each school on your list. It impacts the student’s eligibility for PELL grants, federal student loans, and the Federal Work-Study program.

Some parents get concerned because this number is higher than what they feel they can afford to pay. Keep in mind, though, that this is not the final say-so on your cost of college. Financial aid is determined by each college based on this information, a review of your family’s current circumstances, and an assessment of their desire to welcome your student as a member of their upcoming freshman class. The EFC usually impacts need-based financial aid awards, but there are still plenty of merit-based awards available. Some colleges may choose to offer substantial grants and scholarships, to entice your student to choose them over the other available options.

If you think the EFC is way too high, steps you can take include:

      • Review your FAFSA for errors: You might have over-stated your assets by disclosing items you were not required to list. While certain items are required, you do not usually have to include the value of the parents’ primary residence, life insurance policies, or retirement accounts.
      • Update your income: This year’s FAFSA uses data from your 2020 federal income tax return, and that was a crazy year. This information might not accurately represent your family’s current financial capabilities. If a major breadwinner lost a job or took a significant pay cut, your family incurred substantial medical expenses or somebody passed away, or you lost your home, make financial aid administrators at the colleges aware of your current financial constraints.
      • Check household size: Some families can under-report household size on the FAFSA – it should include the parents and the number of dependents who receive more than half of their financial support from them. In cases of divorce, this may include dependents who don’t actually live in your home. If you have step- or half-siblings, who receive financial support, make sure they are reported in the household size. Even unborn children may be counted, so long as they will be born during the award year.

You can make certain changes to update your FAFSA online, but other information must be supplied directly to the colleges and their financial aid offices if you want to appeal a financial aid decision.

It is confusing, and the Department of Education actually recognizes that fact. Plans are being made to update the FAFSA and redefine the EFC to make it easier for parents and students. In the meantime, though, families need to understand the process as it stands now, to find the best way to pay for your student’s college expenses.

CFAA is here to help with every step of the financial aid process, from completing the FAFSA and completing the CSS Profile to reviewing your Student Aid Report, understanding the EFC, and working through the verification process. Set up a CFAA new client free strategy session to learn more about finding ways to pay for college. To get the latest financial aid information and college application to-do lists, look for my weekly JustAskJodi emails and check out my monthly CFAA e-newsletter.

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