NPC Question: What is Expected Family Contribution?

When filling out your FAFSA, you probably noticed a formula abbreviated EFC. EFC stands for Expected Family Contribution, which is used to determine an individual’s financial need. This, in turn, determines which federal financial aid they’ll qualify for.

EFC is calculated based on a family’s income, assets, taxes, and other financial information. A family’s EFC will vary depending on the size of the family and whether they have dependents.

Though the idea is simple and straightforward (the more contributions a family can make, the less federal aid they need), not many students have experience in finance. Most have to Google basic terms.

Even for parents, determining the value of assets and breaking down complex tax categories can be a nightmare. Worst of all, there’s no standardized EFC calculator to the rescue.

Stress no more—you can find everything you need to know about calculating EFC right here.

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EFC & Financial Aid

EFC is used to calculate the amount of financial aid a student may qualify for through federal programs such as Pell Grants, Federal Work-Study, and Federal Direct Loans. It’s also used to determine eligibility for state-funded student aid programs. Because it will influence the aid available to a student, landing on the correct EFC number is incredibly important.

Unfortunately for families, the Wall Street Journal found that many colleges fail to accurately communicate the amount of federal aid a student is eligible for based on their EFC. This can lead to students receiving inaccurate financial aid packages. In a worst-case scenario, they might even be overpaying for college.

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Confusion Surrounding FAFSA & Federal Aid

So, what’s behind all of the confusion about EFC? Let’s loop back to one of our first points: EFC is confusing for students and families completing FAFSA because there’s a learning curve. The form is complicated and there are a lot of questions to answer.

Additionally, a lack of accurate tuition prices provided by many colleges makes it difficult to predict what they’ll owe for college. That’s because colleges often fail to provide accurate information on tuition, fees, room and board, and the amount of need-based aid that is available.

To make matters more confusing, the Federal Trade Commission found that some colleges stated that EFC was the amount that the family would pay… in reality, EFC is the amount that the federal government estimates the family can contribute to the cost of attendance.

This is a huge issue. After all, how can students and families apply for college if they don’t understand what they’ll owe to cover the cost of attendance?

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NASFAA (and SAI) to the Rescue

To address confusion related to FAFSA (and EFC), the National Association of Student Financial Aid Administrators (NASFAA) has created a FAFSA Simplification Implementation Checklist to help colleges and universities accurately calculate a student’s EFC.

The checklist provides guidance on how families can calculate their EFC. It also provides tips for families so they can ensure they’re entering accurate information.

According to NASFAA, the upcoming FAFSA simplification will make the calculation simpler, faster, and more accurate. The changes will reduce the number of questions, eliminate the need to manually calculate assets, and outline how to figure out things like living expenses.

As outlined above, there are a ton of serious problems with EFC—from how it's calculated to how it's described by universities to how it affects a student’s financial aid outcome. The goal of NASFAA is to address these concerns and make FAFSA easier to complete so that more families will fill out their forms and be eligible for aid.

Specifically, these changes involve something called the Student Aid Index, which will replace EFC. The SAI is a more standardized approach used to determine how much aid each student qualifies for while also limiting confusion surrounding the current EFC form. SAI will go into effect on July 1, 2023.

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