Expected Family Contribution (EFC) will be higher next year

Based on initial proposed changes, families will need to plan for a higher EFC next year.  The Expected Family Contribution or EFC is the number result of completing the financial aid forms.  The federal method is called the FAFSA or Free Application for Federal Student Aid.

There are two major proposed changes that that will impact the EFC calculation:

  1. The parent asset allowance amounts will be reduced.  This will result in a higher amount of countable assets being calculated in the parent asset quadrant of the EFC calculation.  It is unclear why this is occurring since inflation would typically increase the allowance over time.

  2. For gay and lesbian married parents and unmarried biological parents living at the same address, there is a significant planned change.  Both groups will need to report the household incomes on the FAFSA this year.  This will increase the parent’s amount of income included in the EFC calculation.  The result is an increase of their EFC amount in the parent’s income section of the calculation.  With the IRS and FAFSA verification process now in place, colleges will have an easier time finding discrepancies in the information.

It is unclear at this time how much of an impact this will have but I would expect most families will see an increase in their EFC next year.  A higher family EFC will mean an increase in the out of pocket cost for students and less financial aid the government and colleges needs to provide under the need based aid process.

Need based aid is determined by the difference of the college cost of attendance and a family’s expected family contribution (EFC) number.  A school will then meet a percent of that need of which some would be scholarship or grant money.  Properly understanding the four quadrants of your EFC calculation is critical in lowering your cost of education.  For more information, please visit our video resource library.

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