top of page
This site was designed with the
.com
website builder. Create your website today.Start Now

Understanding EFC

Calculating eligibility for need-based financial aid starts with the Expected Family Contribution (EFC). It is the primary responsibility of the family to pay for college, and the EFC is a calculation of how much a family should be able to contribute toward educational expenses for one academic year. The EFC is based on the parents' and student’s income and assets reported on the FAFSA, and is computed using a standard formula or methodology that measures a family’s financial strength. Colleges use the EFC to determine a family’s eligibility for different types and sources of financial aid. 

Calculating the EFC 

Factors in the EFC Formula: 

  • Parent income, parent assets, student income, student assets 

  • Portions of parent and student income and assets are protected by federal predetermined allowances 

  • Parent and student information are subject to different calculations 

  • Household bills or personal debt are not factored into the calculation   

 

Defining Income and Assets 

Income includes Adjusted Gross Income (AGI), plus many types of untaxed income, such as contributions to retirement, tax-exempt interest and untaxed distributions from pensions. 

Assets include cash, checking and savings accounts, investments, trusts and net value of businesses, if applicable. For the FAFSA only, the following assets are not included: 

  • Value of your primary residence 

  • Value of life insurance policies 

  • Value of retirement plans 

  • Certain small family businesses  

Impact of Assets and Income on EFC 

While assets are considered in the EFC formula, for most families income is the biggest factor in calculating the parents’ contribution to the EFC. The higher the parents’ income, the higher the percentage that is expected to be available to pay for college. Likewise, the lower the parents’ income, the lower the percentage that goes into the EFC—in some cases the EFC might be as low as zero. 

Parent and student financial information are weighed separately in the federal EFC formula. The chart below details the percentage of parent and student income and assets that may go into the EFC after all allowances are subtracted, based on 2014-2015 Federal Methodology guidelines. 

 

To learn more view the Federal EFC guide. 

Special Circumstances 

 

If a family is facing unexpected expenses or income fluctuations that will make it difficult to absorb college costs, the family should contact the financial aid office first to see if they recommend submitting additional information or documentation in order to be considered for additional financial aid. This is often called the appeal process. Possible reasons to submit an appeal include: 

  • A recent job loss or reduction in income 

  • Unusual medical, dental or disability expenses 

  • Nursing home or unusually high childcare costs 

  • Home damage caused by natural disaster 

The appeal process can vary from college to college, so families should be sure to follow the instructions provided by each financial aid office. 

Cost of Attendance (COA) 

The Cost of Attendance (COA) represents the school’s all-inclusive “sticker price,” and includes tuition and fees, room and board and estimates for books, supplies, travel and personal expenses. The COA can vary significantly from college to college. 

Don’t rule out applying to a college that is a strong educational fit just because of its cost. While the costs vary between colleges, students may be eligible for more financial aid at colleges with higher costs of attendance. 

How Financial Aid Packages Are Determined 

Each college determines your eligibility for need-based financial aid by subtracting your calculated Expected Family Contribution (EFC) from their Cost of Attendance (COA). Your federal EFC will be used to determine your eligibility for federal, but colleges may use other criteria to award their own institutional funds, such as what was reported on the CSS/Financial Aid PROFILE® or other supplementary applications. 

 

If your EFC is not sufficient to pay the full Cost of Attendance, you have financial need, or eligibility for financial aid. 

 

In the example below, a family with a $5,000 EFC has an increasing amount of financial aid eligibility as the total Cost of Attendance increases. In most cases, families do not pay the full cost at colleges or universities because of financial aid opportunities. 

 

 

 

After financial aid is applied toward the total costs at the school, the family is responsible for what is left. These remaining out-of-pocket expenses are called “net price”. Keep in mind that different financial aid awarding policies make it difficult to predict which college will be the most affordable for your family. Families are encouraged to use the Net Price Calculators found on colleges web sites, and consider applying to at least one college that will be affordable regardless of financial aid. 

 

COLLEGE SAVING PLANS

This publication provides an overview of 529 plans and comparison of the two types of these plans: prepaid tuition and college savings  http://www.sec.gov/investor/pubs/intro529.htm

 

  1. Named for its address in the federal tax code, a 529 comes in two varieties: a savings account and a pre-paid tuition account.  http://www.collegesavings.org/index.aspx

 

  1. The Nevada College Savings Plans Program offers families across the nation a wide variety of college savings options, with the benefits being able to be used at any eligible institution of higher learning, including universities, colleges, and trade schools.  For more information visit http://www.nevadatreasurer.gov/CollegeSavings/CSP_Home/

 

 

Nevada Prepaid Tuition Program    https://www.nvprepaid.gov/

bottom of page