After giving almost a hundred college funding workshops on the East Coast in the past three years, one of the most common questions I receive is this: “In layman terms, can you explain all this EFC stuff?”

It’s a simple question that should have a simple answer.

Per the FAFSA website, the EFC (Expected Family Contribution) is a determination of your family’s financial strength and is calculated according to a formula established by law. It considers your income, assets, benefits, and family size among other things. Unfortunately, the formula does NOT take the family’s debt and liabilities into account. Your Expected Family Contribution is NOT the amount you will pay for college.

How Do You Interpret This Number?

As the FAFSA website states, “Your EFC 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. It is a number used by your school to calculate the amount of federal student aid you are eligible to receive.”

When mom and dad (or in some cases the student) fill out the FAFSA form, they’ll receive something called a SAR, which stands for Student Aid Report.  This SAR report will disclose the EFC number for that student.

The EFC is only the first step in calculating the true cost of college for your child. The Cost of Attendance (COA) minus the student’s EFC equals the students financial aid eligibility.

For example, if the EFC for the student is $20,000, and the COA for the college is $45,000, then the math is

$45,000 (COA) – $20,000 (EFC) = $25,000 of financial aid eligibility.

It is crucial to understand that this $25,000 is not necessarily what the student will receive in aid. Instead, it represents the number that the student is eligible for. Just because you’re eligible for something doesn’t mean you’re going to get it.  Basically, some schools will meet more of your need than others.

All of this may seem nonsensical, but if you have the patience to piece it together you will save thousands of dollars.

Complications – Adding More Mumbo to the Jumbo

Let’s try and make sense of all this jargon. Remember, different schools will cover varying amounts of your financial need, and each school’s breakdown of financial aid will be different as well. That is, some schools will give much more Gift Aid, which is money you do NOT need to pay back, and some schools will give more Self-Help Aid, which is money in the form of loans and work-study that you have to pay back.

In the example above, the student—we’ll call him Johnny—qualifies for $25,000 of financial need from his top school. What if the school only meets 45% of Johnny’s financial need? That means the school will only give him $11,250 of the $25,000 for which he is eligible.  As a result, Johnny and his family must come up with $13,750 in addition to his EFC of $20,000 to pay for college every year.

Let’s take this a step further. The school will give Johnny $11,250 of financial aid, but what if 55% of this aid is in student loans which must be paid back?  That is $6,187 in loans (plus interest) in addition to the EFC of $20,000 (remember this is the estimate of what his family “should” be able to pay out of pocket) AND the $13,250 that the school will not cover. Add these all together, and his out-of-pocket cost will be close to $41,000 per year.

Finding Your EFC as a Launching Point

So, besides depressing you, what am I trying to say? I’m saying that the EFC is a good starting point for your college funding question. Before you pick what financial vehicle you’ll be funding for the next 5, 10, 15 years, you need to establish whether little Johnny can qualify for any financial aid.

Once you’ve established a tentative EFC, then you can begin choosing what financial vehicle or vehicles are the most efficient to use based on how much aid your kid qualifies for. Whether your student is in the 1st grade or 11th grade, you first want to understand and calculate an EFC, and then start planning accordingly.

This is probably the only thing regarding the EFC “mumbo jumbo” that truly makes sense.


Demetrius Doss






To calculate your EFC now, hover over the “Get Help” tab at the top of the page and then click on EFC Calculator. Or just follow this link:

Related Reading:

Why Do I Have Two Different EFC Numbers?

College Planning Alphabet Soup: FAFSA, CSS, EFC, COA

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