Typically, the lower your child's EFC, the more financial aid your child will receive. Factors such as family size, number of children in college, savings, and income — all of which are included on the FAFSA — are used to calculate your EFC.

There are three formulas to calculate the EFC:

• One for dependent students
• One for independent students without dependents other than a spouse
• One for independent students with dependents other than a spouse

How the EFC is used

Once your FAFSA is processed, your family will receive a Student Aid Report (SAR) that contains the official EFC figure. The same information is also sent to the schools your child listed on the FAFSA.

Next, the financial aid administrator (FAA) will determine your financial need. Need is defined as the difference between the cost of attending college and your EFC. If there is a difference, your family may be eligible for aid.

   Cost of Attendance
– Expected Family Contribution
= Financial Need

Based on your financial need, the FAA will prepare your financial aid package. The financial aid award letter tells how much financial aid you could receive through federal, state, and school-based programs if you accept admission at a particular college.

Formulas

Your EFC may vary from one institution to another, and is generally calculated using one or both of the nationally accepted methodologies.

Federal EFC methodology

• Based on a formula established by the federal government.
• Takes into account family income, assets, size of current household, and the number of family members currently attending college.
• Determines eligibility for federally-sponsored financial aid such as Pell Grants, Perkins and Stafford loans, and Work-Study programs.

Institutional EFC methodology

• Used by institutions and organizations to determine a student's eligibility for institutionally-based, private aid programs.
• May vary from college to college.
• Additional factors in a family's financial situation are sometimes considered to determine a student's eligibility for institutional need-based aid.
• May be used instead of, or in addition to, the federal EFC to determine eligibility to receive financial aid from college or private funds administered by the college.

The EFC is not just your contribution. Your child should share responsibility for meeting the cost of college.

An added bonus: When students contribute to paying for their education, they are more motivated to do well in school because they feel the cost firsthand.