EFC- Every Family’s Confusion
EFC is a critically important number for parents of college-bound students to understand. Yet most families don’t even learn that it stands for Expected Family Contribution until it’s way too late – too late to understand its financial impact to out-of-pocket college costs and, in some cases, too late to influence it.
EFC is the determining factor for the majority of college financial aid. Total merit scholarship funds are much smaller than need-based aid, and it’s the EFC calculation that demonstrates need.
Most colleges use the Federal Methodology (FM) for determining a family’s EFC. Most public and private colleges use this methodology.
About 275 colleges (mostly private) use the Institutional Methodology (IM). This list of “highly-selective” schools includes the Ivy League, Georgetown, Stanford and USC.
Schools using the FM gather your data via the FAFSA (Free Application for Federal Student Aid). The EFC calculations are determined by the U.S. Department. of Education and the schools have limited subjectivity of a family’s financial aid eligibility beyond the federal rules and regulations. The EFC calculation determines your eligibility for federal and state funds, including: Pell, SEOG and Cal Grants; Stafford, Perkins and PLUS loans; and Federal Work-Study programs.
Schools using the IM gather your data via the CSS/Profile Form. This form is administered by the College Board and unlike the FAFSA, it’s not free.
The IM calculation is often higher than the FM because it assesses home equity along with several other assets not declared on the FAFSA. It’s important to note, however, that home equity assessment is non-uniform among the IM schools. If your student is considering applying to an IM college, I strongly recommend calling a financial aid officer at that school and ask what their policy is regarding home equity assessment.
Every family should learn their EFC in the early stages of the college selection process. Ideally, this should be done in the sophomore or junior year in high school. Go to www.LearnYourEFC.org for a free – and precise – calculation.
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Chuck, you were right. I didn’t believe that there were 2 ways to calculate the EFC. This sfuff is very confusing. Dan and I are grateful for all the help you have given us. Talk soon.