Financial Aid: 3 Things You Should Know About Your EFC (Your What?!)
March 24, 2014
Be FutureWise About COLLEGE
By: Jenn Curtis
You might be asking, "My EFC? What does the abbreviation even stand for?" Funny because your Expected Family Contribution (EFC) is one of the most important factors to know as you and your student research schools, yet many families don’t take the time to learn it until it’s too late. Here are 3 things you absolutely must know now:
1. There isn’t just one calculation: Your EFC is the money that you will be expected to pay toward your child’s tuition each year. Often, families are surprised to learn that there are 2 ways to calculate it. The FAFSA uses the Federal Methodology (FM) to calculate your demonstrated need and thus your expected contribution. This is all fine and dandy until you come across the CSS/Profile, which is used by many private schools (and a handful of public schools) and which uses the Institutional Methodology (IM)—leading to another calculation altogether. What does that mean to you? Maybe the $10,000 contribution that you expected will be readjusted to $20,000 under the IM. You can find a calculator incorporating both methodologies here.
2. You Should Learn your EFC Now: Yes. Now. It’s never too early to calculate this important number that is essential to keep in mind from the get-go. Knowing the EFC even as early as your student’s freshman year can be key in planning ahead and researching schools that are appropriate for your financial situation. Which brings me to my next point.
3. Learning your EFC will help determine if you should be looking at schools that offer generous merit aid: If you learn that you will be receiving little to no aid (meaning that you have a high EFC), it is a good idea to start researching schools that offer merit aid, which is money awarded to students based on talent and not on their financial situation. Some schools are more friendly than others when it comes to delving out merit aid—and some schools don’t offer merit aid at all. When you are smart about crafting a college list based on the likelihood of receiving merit aid, you help avert disaster and disappointment when award letters start to pour in.
The bottom line is that you start the financial conversation NOW so that all parties know what you can afford, and expectations are managed from the outset.