Why should a family learn how to use an Expected Family Contribution or EFC Calculator? Beginning October 1st, the FAFSA form or Free Application for Federal Student Aid will be available for the school year 2020-2021. The Expected Family Contribution or EFC is the amount a college will use in estimating a student’s financial need. Families will get their Expected Family Contribution number after completing the FAFSA form and this number will be sent to the colleges the student has specified.
How is the EFC Calculated?
Most people believe the EFC to be one number, but it is the sum of four significant calculations. PayForED breaks down the Expected Family Contribution so that parents and students can understand what details are involved in this calculation and their financial aid positioning. The actual calculation is four separate numbers that are summed together: parents’ income, parents’ assets, student’s income, and student’s assets. Each of these components has separate rules and allowances. To read more about each of these components click here to read our blog article titled, “EFC Calculation”.
Using the PayForED’s EFC Calculator
One of the functions built into the PayForED’s College Cost Analyzer is the EFC calculator. Families can get an advance preview of how much financial aid they might receive for all the schools on a college list. The EFC Calculator in the College Cost Analyzer was developed using the same formula as the federal government and has been updated for the FAFSA year 2020-2021 academic year.
You might wonder how the College Cost Analyzer software is helpful? With this software, families only need to input their financial information once and then the information will be generated for all of their schools on their list. This fast and easy comparison will show families by school what they are expected to pay. If the calculation shows that they are eligible for less aid than was expected, it helps engage the family and allows them to review the colleges on their child’s list. Questions on how much merit aid or outside scholarships should also be discussed during this time, along with the EFC number.
This approach is done twice in the PayForED methodology. The first is at the pre-application process and then again once the acceptance letter is received. By using this method it improves the college application list and then helps a family make an informed decision by allowing you to compare colleges side by side easily.
How Accurate are EFC Calculators?
Most college websites have net price calculators which will give a family an estimate of what the college will expect to pay. The question you will need to determine is how accurate are these calculators and do you want to go spend your time going to every college site to complete this process. If you go this route, always check to see if the cost of attendance data is reflecting the more current cost. Based on a recent University of Penn Study many college net price calculators are not updated.
Families also need to review the financial information that they enter. The accuracy of the EFC number is dependent on the accuracy of your information. When you do the FAFSA, we recommend that you enter the information and then wait a day to go back and check your information. If you use the College Cost Analyzer, the EFC number calculated should give you a good estimate for your FAFSA or Federal EFC number. This software solution will also provide additional transparency to your net cost and debt at graduation for each college.
Consulting a Financial Advisor
After using the PayForED EFC calculator, you may need more extensive help finding financial strategies to help lower your EFC and cost of college. Most people underestimate the paying for college complexity. If you want to consult an expert, a list of College Funding and Student Loan Advisors (CFSLA) are listed on the PayForED website.
Remember, your EFC number is just one part of the paying for college puzzle. Other college costs saving ideas include educational tax credits, college saving plans and selecting the best financing options.