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The EFC

This might be one of the most confusing aspects of applying for financial aid. EFC is an acronym for Expected Family Contribution. In short, it means this EFC number is the dollar amount that the federal government expects you to put towards your education for that particular school year.

For example, your EFC might be calculated at 2500, this usually means that you will be expected to put $2500 towards your education that school year above and beyond grants and loans.

The award package is put together by taking the schools Cost of Attendance, subtracting the EFC; this will equal the financial need.

There are 6 different formulas that the federal government uses to determine your EFC.

A) Dependent Student
B) Independent without dependents other than a spouse
C) Independent with dependents other than a spouse
D) Simplified formulas of all 3.

For the 2003-2004 award year, a dependent student qualifies for the simplified EFC formula if all of the following are true:

(1) The student’s parents filed or are eligible to file a 2002 IRS Form 1040A or 1040EZ (they are not required to file a 2002 Form 1040)1, or the parents are not required to file any income tax return; and

(2) The student filed or is eligible to file a 2002 IRS Form 1040A or 1040EZ (he or she is not required to file a 2002 Form 1040)2, or he or she is not required to file any income tax return; and

(3) the 2002 income of the student’s parents from the two sources below is $49,999 or less:
• for tax filers, the parents’ adjusted gross income from 2002 Form 1040A or 1040EZ3 is
$49,999 or less, or
• for non-tax filers, the income shown on the 2002 W-2 forms of both parents (plus any other earnings from work not included on the W-2s) is $49,999 or less.

For the 2003-2004 award year, an independent student qualifies for the simplified EFC formula if
both of the following are true:
(1) the student (and the student’s spouse, if any) filed or is eligible to file a 2002 IRS Form
1040A or 1040EZ (he or she is not required to file a 2002 Form 1040)4, or he or she is not
required to file any income tax return; and
(2) the student’s (and spouse’s) 2002 income from the two sources below is $49,999 or less:
• for tax filers, the student’s (and spouse’s) adjusted gross income from 2002 Form
1040A or 1040EZ5 is $49,999 or less, or
• for non-tax filers, the income shown on the student’s (and spouse’s) 2002 W-2 forms
(plus any other earnings from work not included on the W-2s) is $49,999 or less.

The simplified formulas DO NOT take your assets into account.

If you are interested in looking at what your EFC might be before filling out the application, you should go to www.studentaid.ed.gov , click on publications and you can get a copy of the EFC worksheet.