Free FAFSA Guide
The information you input in your FAFSA will be used to calculate your EFC. The EFC is calculated by the U.S. Department of Education using a formula which is established by law.
There are two financial aid applications that can be filed to determine your Expected Family Contribution (EFC): the Free Application for Federal Student Aid (FAFSA) and the CSS/Financial Aid PROFILE. The FAFSA is the most widely used, whereas the CSS PROFILE is required at approximately 400 colleges/universities.
Before we get into the nitty-gritty details of how these two different forms calculate your EFC, it’s important to note that if your college requires the CSS/Financial Aid PROFILE, you still need to complete the FAFSA (i.e., you need to fill out BOTH forms).
Both forms are available every year starting on October 1.
The FAFSA Federal EFC
The FAFSA utilizes a financial aid formula known as Federal Methodology (FM). Most colleges in the United States use the FAFSA to determine EFC.
This is the number calculated by the U.S. Department of Education. Overtime the EFC and what it means has shifted quite a bit. Your federal EFC is more of an index used by your college to determine how much financial aid you would receive if you were to attend their school.
Many think this is the amount of money your family will need to pay out of pocket, but it’s not. (And yes, we can hear the sound of relief from some of you!) It is a great goal number for your family to contribute, but it is not required that your family pay this amount.
Understanding how your income, assets, and college savings plans impact the Expected Family Contribution (EFC) can be tricky. This information is intended to give you a better understanding of how these items should be treated, and what effect they will have on the calculation of the EFC.
Impact of Income and Assets on Federal Student Aid for Dependent Students
|Item||Protected Portion||Reduction in Aid Eligibility|
|Parent Income||Income Protection Allowance (IPA)3 $15,180 to $39,430 for the 2019-2020 FAFSA||22% to 47% of available income after IPA|
|Dependent Student Income||Income Protection Allowance (IPA) $6,600 for the 2019-2020 FAFSA||50% of available income after IPA|
||12% of asset net worth for reportable assets above the asset protection allowance|
||20% of asset net worth for reportable assets|
|Number in College||The parent contribution portion of the Expected Family Contribution (EFC) is divided by the number of children enrolled in college, increasing eligibility for need-based financial aid.|
Special Treatment of 529 College Savings Plans on the FAFSA
|Account Owner||Treatment of Assets||Treatment of
|Dependent Student||Parent asset||Ignored||Taxable income to the beneficiary|
|Parent of Dependent Student||Parent asset||Ignored||Taxable income to the beneficiary|
|Independent Student||Student asset||Ignored||Taxable income to the beneficiary|
|Grandparents and others||Ignored||Untaxed income to the beneficiary||Taxable income to the beneficiary|
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