The Free Application for Federal Student Aid is the official governmental form students must complete to apply for federal financial assistance to help their parents cover eligible college expenses. Your answers on the FAFSA determine the expected family contribution, also known as the EFC, which is the amount your family should be able to contribute toward the cost of attending college. The FAFSA website recommends that you complete the form online, but you can also request a paper copy. To determine what the amount of the EFC is, you must provide information from your current tax return and from your parent's current tax return if they claim you as a dependent.
Your EFC is an estimation based on your answers on the FAFSA as to what federal financial aid administrators think you or your parents can afford to pay out-of-pocket for your college expenses. It doesn't reflect what you actually receive in financial aid. For example, you might receive enough money through grants, scholarships and federal aid to cover all your expenses, without paying any money out of pocket. Alternatively, your EFC might not be enough to cover the difference between your actual college expenses and the aid you receive. Think of the EFC as the government's best guess as to your family's available cash to cover qualifying college expenses, incuding tuition, fees and required books and materials.
Federal vs. University Funding
Colleges and universities often request copies of your FAFSA, including your EFC, to determine how much financial aid they should award you. However, the FAFSA is officially a request for federal aid, such as Pell Grants and Stafford Loans, and is not a request for university-issued grants or loans. Universities have their own formulas for determining how much financial aid they can afford to give you, often based on your finances as well as on their endowments. Your FAFSA and the EFC provide valuable information about your family's current cash flow, but they don't dictate what the colleges and universities choose to contribute toward your educational expenses.
EFC Formulas and Calculations
The FAFSA has built-in formulas for calculating your EFC. The formulas consider the size of your household, the number of people in your household currently enrolled in college, your family's adjusted gross income, available tax deductions, family assets and current bank balances. You don't have to include the equity in your primary residence -- typically where your parents live if they claim you as a dependent -- as an asset. Primary vehicles that you or your family use for regular transportation aren't considered assets, either. Your EFC is based on full-time enrollment -- approximately nine months a year -- at an accredited college or university. Part-time students are eligible to receive partial Pell Grants.
Even though universities use FAFSA-generated EFCs to evaluate financial need, they consider other factors, such as whether you submitted your information by the required deadlines or have extenuating circumstances that affect your ability to pay for college. Don't let an EFC that's higher than what you can pay stop you from applying to college or from applying for financial aid. You might be able to convince a financial aid administrator that medical bills or outstanding debts limit your family's ability to afford the EFC the FAFSA has determined.