What Is the FAFSA® EFC Formula?

When you submit your Free Application for Federal Student Aid (FAFSA®), your expected family contribution (EFC) plays a major role in determining your eligibility in regards to financial aid. 

What Is the Expected Family Contribution (EFC)?

The Expected Family Contribution (EFC) is a measure of your family’s financial stability and is determined by using a formula established by law. Your family’s taxed and untaxed income, assets, and benefits are all considered in the formula. It also takes into consideration your family size and the number of family members who will be attending college during the year.

EFC is a number that helps colleges and federal aid representatives determine how much financial aid you qualify for. The schools you include in your FAFSA® application will use your EFC to determine your federal student aid eligibility and financial aid award.

Keep in mind, that your EFC is not the amount of money your family will have to pay for college nor is it the amount of federal student aid you will receive. Instead, it is a number used by your school to calculate the amount of federal student aid you are eligible to receive.

Filling out the FAFSA® is a critical step in funding your college years, and getting help is highly advised. Entering your family’s income in the application is one of the most difficult and complicated steps in the process. Several variables, all of which help determine your EFC, will need to be provided. There are three different formulas used for the FAFSA®, each with a simplified version available to those who qualify.

Formula A

Formula A is used for dependent students. This means that you’re the dependent of parents or guardians who declare you as such on their tax forms. For the 2017-2018 school year, there are a number of things that can automatically bump you out of Formula A status, making you an independent student:

  • You were born before 1994.
  • You’re married or separated, but not divorced.
  • You’re a U.S. Armed Forces veteran, or on active duty.
  • You’re entering grad school or a doctorate program.
  • You have dependent children of your own.
  • You’re an emancipated minor, ward of the court, or in foster care.
  • You’ve been determined to be homeless — or self-supporting and at risk of homelessness.

If you have dependent student status, you’ll be required to use the Formula A worksheet and enter information such as your parents’ gross income, untaxed income, benefits (such as disability or social security), and other financial resources. You’ll then provide for tax allowances against this income and expense allowances based on one- or two-parent families and how many parents are employed.

If the total amount so far is $25,000 or less, your EFC is automatically zero. This is also the case if your parents weren’t legally required to file federal taxes in 2015, or if they were eligible to file Form 1040A or 1040EZ (in lieu of the standard 1040 form). Another way to obtain a zero EFC is if any household members qualified for federal benefits such as Medicaid, SSI, SNAP, WIC, or TANF. A zero EFC goes a long way toward getting the highest possible levels of federal aid via the FAFSA®.

If this doesn’t describe your situation, you’ll need to continue with the Formula A worksheet by providing your parents’ assets such as cash, savings accounts, and checking accounts. Their investment portfolio, if applicable, will also need to be shown. If your parents have other college-aged dependents, the division of funds is allowed.

Finally, you’ll need to provide your own income. This data is similar to what was provided for your parents, encompassing such items as employment income, money in the bank, and investments.

Formula B

Formula B is for independent students without dependents of their own (other than a spouse). Most adult students will fall into this category. If this describes you, some of the information used to calculate your EFC for the 2017-2018 year include the income you and your spouse (if you have one) earned in 2015. This includes taxed and untaxed income. If your spouse is also enrolled in college at least half-time, you’ll indicate it in this form. 

As with Formula A, you’ll need to provide your liquid assets such as cash, savings, and checking. Business interests and investments will be indicated as well. 

If the combined income of you and your spouse is under $50,000, and you meet the aforementioned qualifications for zero EFC listed previously (Form 1040a or 1040EZ, enrollment in benefit programs, etc.), you qualify to use the simplified Formula B worksheet. You can skip some sections, such as those about your assets and investments. Students who fall into the Formula B category cannot receive an automatic zero EFC.

Formula C

This worksheet is similar to Formula B but is intended for independent students with dependents of their own. One major difference is the ability to qualify for a zero EFC if the combined income of you and your spouse is $25,000 or less, plus the Form 1040 and benefit qualifications listed previously. 

Other Information to Consider

  • Dislocated worker status, whether it applies to parents, spouses, or the students themselves, can help students qualify for either zero EFC or a simplified worksheet. 
  • The prerequisite that calls for Form 1040A or 1040EZ filing also applies for tax code equivalents for the U.S. Virgin Islands, American Samoa, Guam, the Commonwealth of Puerto Rico, Palau, and other territories outside the United States.
  • Some of the means-tested benefit programs used for reference (such as TANF) may have different names, depending on the state in which the benefits are received. 
  • The criteria used to determine “independent status,” such as those involving homelessness, aren’t set in stone. If you have unusual circumstances that are documented and can be shown to a financial aid administrator, your status can be overridden from dependent to independent. This can help you get additional financial aid.

Filling out the FAFSA® can be a tedious process, made more so by the calculation of your EFC. However, the FAFSA® is critical in ensuring the financial stability of your college years. With federal aid and grants, you can enjoy low-interest rates, long payment periods, and other ways of minimizing the crush of student loan debt. Getting help with your FAFSA® is highly recommended. 

If you’re looking for a more user-friendly version of the FAFSA® application, I suggest you file your FAFSA® with FRANK for free.