The Expected Family Contribution is Crucial To Receiving Financial Aid

Your EFC or Expected Family Contribution is the most important number that families will calculate for receiving aid for their children’s college education. Legally reducing that number equates to receiving more college financial aid.

How The Expected Family Contribution Is Calculated

The EFC is a combination of the income and assets of both the student and their parents as well as any other family member that would contribute to the cost of college. It is important to note that the EFC gives greater weight to the assets and income of the student. Assets that count in the calculation are accounted for at 20% of student assets versus around 6% of parent assets.


With that in mind, families should consider spending student assets prior to spending parental assets. This should be considered prior to filling out the FAFSA (Free Application for Federal Student aid). As an example, if your student has money in their name and they need transportation at school, use their money for the down payment or outright purchase of a car instead of using the parents’ assets.


Tips for FAFSA Preparation


  1. Avoid if you can recognizing income on your tax return. For example, if you were going to sell a piece of real estate to pay for college, the income that would be recognized will increase your EFC thus reducing your aid. One idea is to borrow against the asset versus selling it. You don’t claim borrowed money as income. Once your student is through with school, you could sell the real estate at that time and not recognize the income during the periods you have to fill out the FAFSA.
  2. Prepare early. Give yourself ample time to prepare the FAFSA which calculates the EFC for the colleges and universities your student is considering. Try to figure out the best way to position your student’s assets and income as well as your assets and income to legally reduce your EFC. Waiting to the last minute is not a good idea and could literally cost you thousands if not tens of thousands of dollars in potential aid.
  3. Be accurate and honest in your FAFSA submission. Making mistakes in the preparation of the FAFSA is one thing, but NEVER lie on your FAFSA! Keep in mind as you prepare your FAFSA application that over 30% of the applications undergo a more detailed inspection or the equivalent of an audit. Being deceptive on your FAFSA application is not worth the risk. If you get caught falsifying the numbers, you will have to give back any financial aid received. There are also potential fines to the tune of tens of thousands of dollars. You could also face up to five years behind bars.


Careful planning and legally positioning your assets and income can effectively and ethically reduce your EFC and increase the amount of aid you receive for your children’s college education.

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