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Expected Family Contribution

As parents, we wear ourselves out making sure our children are ready for college. We monitor their grades, make sure they prepare for their SAT/ACT tests, push them to volunteer in the community, and encourage them to participate in extracurricular activities at school.

Now we also need to make sure that they can get through school without breaking our bank accounts or sending them into a death spiral of debt.  This can all be so overwhelming!

Many parents kick off the college process by trying to determine their Expected Family Contribution, since that is the basis for almost all college funding strategies. An EFC calculator will usually provide two different numbers—numbers which you will then use to determine which schools are best for your family. What are these numbers and how can you best utilize them? That’s what we are going to uncover today!

When you calculate your family’s EFC, the calculator will spit out the Federal Methodology and the Institutional Methodology. 

The Federal Methodology

The Federal Methodology is commonly referred to as the FAFSA or the Free Application for Federal Student Aid.  It is used by almost every trade school, college, and university out there.  The application focuses on your family’s income and helps the financial aid office determine how much money your family should be able to spend to send your child to college.

Unfortunately, most families fill out 10-15 forms for college and spend 20-30 hours supplying the information just to find out later that they filled the forms out incorrectly. The FAFSA is no exception. One of the more common mistakes parents make on the FAFSA is putting their home equity or qualified retirement accounts down as investments.  Parents might also list the cash value inside their permanent life insurance as savings.  Retirement assets are not counted against you on the FAFSA! Mistakes like these will adversely affect your child’s qualification for financial aid. It is imperative that you thoroughly read and understand all the questions on the FAFSA.

The Institutional Methodology 

The other EFC calculation is the Institutional Methodology, which is mostly used by private universities.  They still require the FAFSA but also use the CSS Profile in conjunction with the FAFSA to determine how much private aid you should get.  The CSS Profile uses the Institutional Methodology to find where your money could be hiding. The CSS Profile goes much deeper into your family finances than the FAFSA because these schools are dipping into their own endowments to provide aid and want to make certain how much you need.

In addition to questions about adjusted gross income, the CSS Profile asks questions about your farm or business, equity in your home, how much the non-custodial parent makes, and many other questions to determine if there is money or value hidden away that could be used to pay for college.

It is crucial that the information on the CSS Profile and the FAFSA match up because inconsistencies can delay acceptance of awards and scholarships.

Which Methodology Will Be Better for Your Family? 

It all depends on where you have your assets. Divorced households can also have a huge impact on the formulas.

The first thing you need to do is find out what forms are required for the schools your child is interested in attending.  Make sure you understand what is being asked on the forms.  Then work on implementing a strategy that maximizes your child’s ability to receive aid by moving your assets into the appropriate products and financial vehicles based on the questions being asked.

Now that you understand why there are two different EFC numbers, you can move into unlocking the other mysteries of getting your children through college without compromising your retirement or your child’s financial future.  Always remember that you are not alone and there is a lot of help available if you work to find it!


Willis Holdeman










Additional Reading – Most Common FAFSA Mistakes

Department of Education: 12 Common FAFSA Mistakes

National Association of Student Financial Aid Administrators: FAFSA Tips and Common Mistakes to Avoid

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