Have you heard the term Expected Family Contribution on TV or social media and wondered what exactly it is, and how does it affect your child and family? Planning for your child’s financial aid can be an overwhelming sea of new terms and calculations. Let’s dive into and simplify a seemingly complicated journey. 

I am here to tell you that you’re really going to want to know and understand Expected Family Contribution to help plan for your child’s education.t is an important concept to understand because it is the first piece of the puzzle when you start to think about college affordability for your family.


What Is The Expected Family Contribution (FAFSA)?

Expected Family Income (EFC) is a term used in the Free Application for Federal Student Aid (FAFSA), and simply is a calculation (based on “taxed and untaxed income, assets, and benefits like unemployment or Social Security”) to determine the annual minimum amount that the college thinks you can afford to pay for one year of college. 

When you submit the FAFSA you are sharing financial data for both the student and the parent(s) as well as some demographic and other family information. This information is put into a formula that calculates your EFC\. In fact, after you hit submit, the confirmation page that follows tells you exactly what your EFC is. (So, print this page for your records!)

I want to emphasize that this is not the amount you will have to pay. Your responsibility according to the college could be more than this and often is. I also want to emphasize that this is for one year of college, not all four years. You will be required to submit the FAFSA each year. A new EFC will be calculated for each year your child is in college.


How the FAFSA EFC and Financial Need are Calculated

When I work with parents, I create three different EFC estimates as part of the financial planning work I do. Through the years, working with hundreds of families, I have never had a parent who agrees with their EFC estimates. I always get the question, “Peg, this is for all four years, right?” 

Then that question is followed up with “how did the FAFSA get this number anyway?” There are some hidden or seemingly unreachable income amounts calculated into the EFC equation. This includes parent income and non-retirement assets and student income and non-retirement assets. It also includes the values of businesses and/or family farms in some cases. There is also other financial data that may be included (e.g., pre-tax retirement contributions).

Now we determine how financial need is calculated. Colleges use your EFC in the equation:

Cost of Attendance – EFC = Financial Need.

But is there anything you can do if you feel your EFC is too high? Yes! You can try to appeal or look at alternative financial aid options (like scholarships) as well. Learn more: When Your Expected Family Contribution is Too High


An EFC Example

So, for example, if a college has a cost of attendance of $60,000 and you have an EFC of $30,000, then your financial need would be $30,000. This is an important number to the college because this is how they establish if your family has need-based eligibility. 

Then the college will attempt to meet some or all of that need with Federal, state, and endowment funds and different types of loans. Hopefully, most of this need will be met so there is less money out of your pocket. Colleges vary in the percentage of financial need they meet.

Reminder: The only way your EFC gets calculated or you are eligible for financial aid is by submitting the FAFSA. I strongly recommend you submit the FAFSA your student’s incoming year and every year following to receive proper grants and other financial aid options..

Learn more: Applying for Financial Aid: FAFSA and CSS Profile


Looking Ahead

Now that you are an expert on all things EFC, I want to give you a heads up that this term will disappear starting with the FAFSA that goes live on October 1, 2023.

In December 2020, Congress passed the Coronavirus Relief bill. The FAFSA Simplification Act was embedded in this bill. There are many changes on the horizon for the FAFSA. One of them is a terminology change. Effective in the 2023-2024 school year, the Expected Family Contribution will be called the Student Aid Index (SAI). SAI will still be this first piece in the puzzle and will still be calculated using the FAFSA data submitted by families. 

This name change came about due to some confusion with families that they thought the EFC would be what they would be expected to pay. Given the name, it’s easy to see where they’d think that. But as I mentioned earlier, this is quite often not the case, so the new name hopefully will be a better descriptor of what the EFC actually means. In any event, I don’t want you to be confused if you start seeing the term Student Aid Index (SAI) floating around.

The new equation starting with the 2023-2024 school year for financial aid award packaging will be Cost Attendance – SAI (Previously EFC) = Financial Need

Learn more about FAFSA changes: FAFSA Changes 2023-24: What You Need To Know

It’s important to start looking at this first piece of the puzzle around college affordability when your child is in their sophomore year in high school, so you can ahead of this. Colleges are discounting their sticker prices to allow more students access to their educational offers. One of the tools they use is need-based aid. It’s important to understand as a family if need-based could be a part of your college funding strategy, and the only way to do that is by submitting the FAFSA and receiving your EFC (soon to be SAI). This calculation most likely vary from college to college.

I encourage you to take this first step when your student starts applying for colleges. And, as always, remember to enjoy this journey and beginning of a new chapter!

Have some additional questions about the EFC and applying for the FAFSA? We host a biweekly Q&A session exclusively for our College Aid Pro community. And you’re invited to join us at no cost. Sign up for our Office Hours here.