Financing for education may be more stressful than attempting to be in the correct college. That’s what lots of families learn every day as they debate how to pay their bills. In the year 2020 around 19.4 million students enrolled in college and financial aid would be among the most crucial aspects for everyone when picking a college. Filling out the Free Application for Federal Student Aid (FAFSA) is a crucial initial step in planning for college and paying for your education, as well as the entire scholarship application process in which need analysis plays a crucial role.
The Need Analysis is a systematic method that determines the difference between a student’s current financial resources and the educational institute’s desired financial requirements. It is the calculation of a student’s estimated family contribution, which aids in financial aid eligibility if you have financial needs and meet other criteria.
What is EFC?
The Expected Family Contribution (EFC) score is a monetary index that demonstrates a family’s financial strength using in-depth details revolving around the income of a student and their family simultaneously taking into account all financial assets that may play a vital role in facilitating college costs. In simple terms, it provides the federal government insight into the capacity of a student’s family to provide for the student’s education. The EFC takes into account all of your family’s taxable and nontaxable income, assets, and benefits (such as unemployment or Social Security). The size of the family and the number of family members who will attend college during the year is also a factor to consider and take into account.
The Expected Family Contribution (EFC) score determines a student’s eligibility for different types of federal student aid. The EFC calculations, which use information from the Free Application for Federal Student Aid (FAFSA), are used to produce this value. The need grant provided to a student is a function of the EFC value, the higher the EFC, the lesser would a student’s financial need would be. Financial aid administrators (FAAs) subtract the EFC from the cost of attendance to assess a student’s eligibility for the federal student financial aid programs offered by the U.S. government.
What all information is needed to calculate Expected Family Contribution (EFC)?
Your Expected Family Contribution (EFC) score does not indicate how much money your family will have to pay for college, nor does it indicate how much federal student aid you will receive. It’s a number that your college uses to figure out how much financial aid you’re qualified for. Your EFC, or expected family contribution, is the amount the government believes your family can afford to pay for school. Your Expected Family Contribution (EFC)score is influenced by your total family income and benefits and the following points :
- Tax-filing status
- The number of family members
- The number of family members attending college for the year
- Contribution from your family’s assets
In general, the higher your EFC, the more income and assets your family has and the lower the scholarship aid students will receive.
How to calculate Expected Family Contribution (EFC)?
Beginning this year, there are 3 special ways to calculate Expected Family Contribution (EFC), introduced to make it simpler to categorize students into the need aid buckets
- Regular Formula: Income & assets considered into account
- Simplified Needs Test (SNT): Only the income is considered
- Auto-zero EFC: Applies under certain circumstances
The Expected Family Contribution (EFC) score is used to determine a student’s dependent status. Just like most cases, this is a two-step procedure. The first step is to figure out whether or not the pupil is dependent. If a student meets the criteria for being classified as an independent student, the EFC calculation will solely consider the student’s and, if relevant, the student’s spouse’s financial resources. If a student does not match the standards for being an independent student, he or she is classed as a dependant, and the EFC calculation will take into account both the student’s and his or her parent’s financial means.
The applicant’s eligibility for a simplified needs test is determined in the simplified needs test (SNT). If the applicant qualifies for the simplified needs test (SNT), the student’s Expected Family Contribution (EFC) score will be calculated using a smaller number of income-based variables, and assets will not be taken into account. Some applicants who qualify for the SNT may also be eligible for an EFC that is “automatic zero.” If an applicant does not qualify for the SNT, the EFC will be calculated using the full methodology, which takes into account both income and assets.
Reference: (https://www.cuny.edu/wp-content/uploads/sites/4/page-assets/financial-aid/financial-aid-forms/SAM1516chap7.pdf )
When is the Expected Family Contribution (EFC) score used?
Websites like the Top5Colleges offer an EFC calculator to help families estimate what their EFC will be, also promptly informing them of the key dates for filling out the FAFSA, any other scholarship forms, or admission forms of any university.
An expected family contribution (EFC) is an estimation of a graduate’s, and for a dependent student, their parent(s) or guardian(s) ability to afford the costs of a year of post-secondary learning in the United States’ post-secondary higher education. In the United States, the EFC is used to determine whether or not a student is eligible for need-based federal financial aid. The same estimate is utilized for state and institutional (college-based) financial aid in most circumstances. The EFC appears on the Student Aid Report an Institutional Student Information Record, which is delivered when a Free Application for Federal Student Aid (FAFSA) is completed.
How important is it to calculate Expected Family Contribution (EFC)?
The Expected Family Contribution (EFC) score is a figure that affects whether or not a student is eligible for federal student aid and how much.
To evaluate the financial need and establish a student’s eligibility for need-based aid, the EFC is deducted from the cost of attendance at the college. Need-based financial aid from the federal government includes the following:
- Federal student loans with interest rates that are subsidized
- Federal student loans that are not subsidized
- Grants
- Work-study
More federal financial help is available if your EFC is lower. The less financial aid you receive, the more money you’ll need to take out student loans to fund the difference. The EFC is one of the criteria for receiving a Federal Pell Grant. Applicants with an EFC less than the maximum Federal Pell Grant will be awarded one. Applicants with a zero EFC will be eligible for the full Federal Pell Grant.
