| Every
school uses the same formula to determine how much federal
financial aid to award to students: The cost of education
minus the Expected Family Contribution. The EFC is the amount
a family is expected to contribute before the student is considered
for federal funding. The EFC number is calculated by taking
into account student and parent income and assets –
not including the value of the family home.
For independent students, only the student's income and assets
are considered – as well as those of his / her spouse,
if applicable. To qualify as an independent student, you must
meet at least one of the following criteria:
- Be at least 24 years old
- Be an orphan
- Have a dependent other than a spouse
- Be a graduate or professional student
- Be a veteran of the Armed Forces
- Be married
- Be a ward of the court
Financial
Aid EFC Formula |
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Refer to the following EFC calculator
formula, as an indicator of the assistance you’ll be
eligible to receive. The determination of financial need at
any institution depends on two numbers:
- Cost Of Attendance (COA) for your school – also
called the school's budget. The school's COA will include
tuition, fees, room and board, books and supplies, travel,
and personal and incidental expenses. In many cases, there
is a standard fixed budget amount for some of these categories.
The budget amount for travel may vary depending on the student's
home state. Similarly, room and board expenses may be reduced
and travel expenses increased for commuter students.
- Expected Family Contribution (EFC) – the amount
of money you or your family is expected to contribute to
your education. The EFC number is the sum of the student
contribution and the parent contribution.*
- Student Contribution. The calculation of the expected
student contribution is generally 35 percent of the
student's assets and 50 percent of the student's prior
year earnings. (The federal calculation is 50 percent
of the net earnings above $2,200 and 35 percent of the
student's reported assets.)
- Parent Contribution. The parent contribution depends
on the number of parents with earned income, their income
and assets, the age of the older parent, the family
size, and the number of family members enrolled in post-secondary
education. Income is both the adjusted gross income
from the tax return and non-taxable income such as social
security benefits and child support. The Higher Education
Amendments of 1992 eliminated home equity from the Expected
Family Contribution, but many private colleges and universities
still use a parent's home equity as a way of rationing
their school's own grant and scholarship funds. Money
set aside for retirement in a pension plan such as a
401K, IRA, Keogh, or 403b is usually not counted as
an asset. However, the funds contributed to a tax-deferred
retirement program during the previous year must be
included on the FAFSA as other untaxed income. In addition,
an asset protection allowance shelters a portion of
the assets from the calculation of the parent contribution.
The asset protection allowance increases with the age
of the parents to allow for emergencies and retirement
needs.
Your financial need is the difference between the COA and
EFC, and the amount of financial aid for which you are eligible
will be based on this number. Use this basic EFC formula to
determine the scope of financial aid to which you’re
entitled.
Click below to access helpful calculators:
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