How Loans Affect Your Efc Calculation

Expected Family Contribution (EFC) is a calculation made by the US Department of Education to determine how much financial aid a student qualifies for. The EFC is calculated using the figures provided on the Free Application for Federal Student Aid (FAFSA), which includes the family's income, assets, benefits, and other information. The EFC changes yearly as a family's financial situation can vary annually. While the EFC does not directly include loans, it does consider certain assets and debts reported on the FAFSA, which may include loans secured by those assets. The EFC impacts the financial aid package offered by the school, which can include federal grants, student loans, and work-study programs.

EFC and financial aid

Expected Family Contribution (EFC) is a term used to describe the U.S. Department of Education's calculation of the dollar amount a family can afford to pay toward their student's upcoming year of college. EFC is calculated using the figures provided on the Free Application for Federal Student Aid (FAFSA), which include a family's pre-tax income, after-tax income, assets, unemployment benefits, and Social Security benefits. The number of children in college during the academic year and the number of people in the household are also considered.

EFC affects how much financial aid one receives. It changes yearly as a family's income and assets fluctuate annually. The lower the EFC, the higher the amount of need-based aid one is eligible to receive. If the school cannot meet all of the student's financial needs, the family might consider taking out federal student loans, private student loans, or federal PLUS loans for parents, graduate students, and professional students.

The FAFSA replaced EFC with the Student Aid Index (SAI) in the 2024-2025 school year to improve transparency and make the financial aid process easier to understand. The EFC considered how many children a family has in college simultaneously, which the SAI no longer includes. The EFC included a Small Business Exclusion that was eliminated in the SAI, and the EFC Family Farm Exclusion has been modified. However, the SAI still allows the net worth of the family farm to be excluded as an asset in some circumstances. The lowest possible SAI is -1,500, and the highest is 999,999.

While the FAFSA is the main financial aid application form for most types of public funding, another form to consider completing is the CSS Profile. Administered by the College Board, the CSS Profile helps colleges and private scholarship programs calculate a student's level of financial need. Many schools also have their own scholarship or aid applications, so it is important to contact the school's financial aid department to ensure that all necessary forms are completed on time.

EFC and federal student loans

The Expected Family Contribution (EFC) is a calculation by the U.S. Department of Education of the amount of money your family can afford to pay toward your upcoming year of college. The EFC is calculated using the figures you provide on your Free Application for Federal Student Aid (FAFSA) form. This includes your family's pre-tax income, after-tax income, assets, unemployment benefits, and Social Security benefits. The number of family members in college and the number of people in your household is also taken into account.

The EFC is used by your school to determine how much financial aid you are eligible to receive. It is not the amount of money your family will have to pay for college, nor is it the amount of federal student aid you will receive. Your financial aid package may include federal student loans, which you will have to repay in the future. The FAFSA form is the main financial aid application form for most types of public funding, and it must be submitted every year you are in school to unlock federal student loans.

The FAFSA form does take loans into account, but only if they are secured by an asset that is reported on the form. In this case, the value of the asset is reduced by the debt against the asset. For example, the net asset value of a stock market investment is reported by subtracting any margin loans from the investment's market value.

If your college cannot meet all of your financial needs, your family might consider taking out unsubsidized federal student loans, private student loans, or federal PLUS loans for parents, graduate students, and professional students. Graduate and professional students can borrow up to $138,500 in unsubsidized loans (no more than $65,500 in subsidized loans). This limit includes all federal loans received for undergraduate studies.

EFC and non-need-based aid

The Expected Family Contribution (EFC) is an index number used by Student Financial Services to determine how much financial aid a student is eligible to receive for the year. The EFC is calculated using a formula established by law, which takes into account various factors such as a family's taxed and untaxed income, assets, and benefits, as well as family size. The calculation also considers the number of family members attending college or career school.

The EFC is not the amount of money a family will have to pay for college, nor is it the exact amount of federal student aid a student will receive. Instead, it is used as a reference point to assess a student's financial need and determine the appropriate level of aid. The EFC changes yearly to reflect any changes in a family's financial situation.

Non-need-based aid, on the other hand, is financial aid that is not dependent on the EFC. This type of aid considers the Cost of Attendance (COA) and the amount of assistance a student has already received. For example, if a student's COA is $6,000 and they have been awarded a total of $4,000 in need-based aid and private scholarships, they can receive up to $2,000 in non-need-based aid.

There are various types of non-need-based aid available, including the Federal Stafford Unsubsidized Loan, the Federal Parent PLUS Loan, Graduate PLUS Loan, and private loans. These loans do not require a demonstration of financial need and can be used to supplement other forms of financial aid. Additionally, scholarships and fee remissions are typically awarded based on merit or other criteria, rather than financial need, and are therefore also considered non-need-based aid.

EFC and FAFSA

The Expected Family Contribution (EFC) is the U.S. Department of Education's calculation of the amount of money your family can afford to pay toward your upcoming year of college. This figure is calculated using the numbers you provide on your Free Application for Federal Student Aid (FAFSA) form. The FAFSA form asks for your family's pre-tax income, after-tax income, assets, unemployment benefits, and Social Security benefits. Other information, such as the number of children in college during the academic year and the number of people in your household, is also factored in. Your EFC changes yearly as your family's income and assets fluctuate annually.

The FAFSA is the main financial aid application form for most types of public funding. It can help future and current college students get scholarships, grants, work-study jobs, and federal student loans. There are no income limits to apply, and many state and private colleges use the FAFSA to determine your financial aid eligibility. To qualify for aid, you must submit a new FAFSA every year you are in school.

Loans are considered on the FAFSA only if they are secured by an asset that is reported on the form. In this case, the value of the asset is reduced by the debt against the asset. For example, the net asset value of a stock market investment is reported on the FAFSA by subtracting any margin loans from the investment's market value. Similarly, the value of investment real estate is reduced by the amount of any mortgages secured by that real estate. However, a mortgage against your home does not count, even if it was used to buy the investment real estate, because it is secured by your home, and the net asset value of your home is not reported on the FAFSA. Most forms of consumer debt, including auto loans and credit card debt, are ignored by the FAFSA.

The FAFSA website has a threshold question that allows the applicant to skip asset questions when the applicant seems eligible for the simplified formula or an automatic zero EFC. However, in some cases, such as when using a paper FAFSA form, a student who qualifies for the simplified formula will still provide asset information. In these cases, the CPS will calculate two EFCs: one using the assets and one excluding them. The EFC from the simplified formula (which excludes assets) is called the primary EFC and is used to determine the student's federal aid. The EFC from the full calculation is called the secondary EFC.

EFC and CSS Profile

The Expected Family Contribution (EFC) is a crucial factor in determining eligibility for need-based financial aid. The U.S. Department of Education calculates the EFC by considering the figures provided on the Free Application for Federal Student Aid (FAFSA), including family income and assets, benefits, and the number of children in college. The EFC changes annually as family circumstances fluctuate.

The CSS Profile, administered by the College Board, is another financial aid application used by over 400 colleges, universities, and scholarship programs to determine a student's financial need. It is required by many private colleges and a few public universities. The CSS Profile considers various factors, such as home equity, student assets, and parents' retirement accounts, to provide a comprehensive view of a family's financial situation. Colleges use the CSS Profile to calculate their own EFC, which can vary from school to school due to differences in institutional methodologies.

While the FAFSA is the primary form for public funding, the CSS Profile is often required in addition, especially by schools with their own aid money to distribute. The CSS Profile fee is $25 for the initial application to one school, with additional school reports costing $16 each. However, this fee may be waived for eligible first-time domestic college applicants.

The EFC from the CSS Profile can be used to determine a student's financial need by subtracting it from the Cost of Attendance. It is important to note that the CSS Profile cannot be used to determine eligibility for federal aid, unlike the FAFSA.

In summary, the EFC, influenced by both the FAFSA and the CSS Profile, plays a significant role in assessing financial need and eligibility for financial aid. The FAFSA is widely accepted by state and private colleges, while the CSS Profile is used by a substantial number of institutions, particularly private colleges, to allocate their own aid funds.

Frequently asked questions