How do colleges use efc

Colleges also consider the cost of attendance COA , which is an estimate of the cost to attend that college for one year. The COA should include tuition, fees, books, supplies, housing, meals, local transportation, and miscellaneous personal and educational expenses. Colleges then consider different types of aid to meet your financial need. The options boil down to gift aid scholarships and grants and self-help aid student loans and work-study earnings.

Since you have to repay loans and you have to work to earn work-study awards, gift aid which you do not have to repay is always more desirable. Only gift aid reduces the net price of a college, which is the amount you and your family actually pay out of pocket.

Many colleges offer a type of gift aid called merit aid , which they award based on the value a student brings to the college. Colleges offer it to attract students whose grades are at the top of the application pool, or who have a talent or other quality the college seeks.

If you receive merit aid, it will count toward meeting your financial need, just like any form of financial aid. Colleges combine the different types of gift aid and self-help aid when they create aid packages. Each college allocates aid differently, however, according to its policies. Below are a few examples of how such policies can affect your ultimate college net price. Most colleges are open about how they award and package financial aid to students. You can learn more about the policies at specific colleges by visiting their financial aid office websites, or calling the financial aid office.

If you are disappointed with your aid offer, you and your parents can appeal to the college. For example, you can ask for a recalculation based on information the officers don't have. A parent may have lost a job or entered information incorrectly on the aid application. All colleges have an appeal process—you just need to ask.

It's based on the size of your family and how many children you currently have going to college. You likely spend more than that on living, right? Subtract an Employment Expense Allowance. It's intended to cover those expenses that all working parents have, such as buying lunch and commuting. The number you've reached based on the calculations above is called your Available Income AI and is intended to represent how much of your income can be considered for college costs.

Add up total parent assets. Include all cash, bank accounts, net investments, and net real estate, but don't include your primary home or your retirement accounts. This number is based on the age of the older parent and is intended to protect an amount of your assets that you have saved for emergencies or college costs.

This calculation ends up protecting most of your remaining assets for other needs, which is good news. The number you've reached here is your Contribution from Assets. There's a complicated table that provides you this number. You'll divide that number in half if you have two children in college at once. The resulting number is your Parent Contribution.

Set that number aside. Use any income received in the year, regardless of whether or not the student paid taxes on it. This number increases a bit each year. Many students don't have income that exceeds this amount. Determine Student Contribution from Available Income. Like other kinds of assets, a business or farm owned by your family can contribute to a higher EFC.

So the net worth of the family business could still be driving your estimate upwards. Because state taxes can contribute greatly to the cost of living, the EFC formula grants higher state tax allowances to families from states with higher tax rates. A higher allowance results in a lower EFC, because it is deducted from your income in the formula. This mostly occurs because, with more children attending college, the less their parents are expected to contribute to each individual student.

That said, please note that Edmit does not recommend having additional children to save on educational expenses. Such a tactic can be counterproductive! If your student has been given a high EFC and any of these above circumstances apply to you or your family, you could now have an explanation for why. Not all colleges use the EFC as their main measure of student financial need; many colleges instead use the CSS Profile, which drills even deeper into your financial situation.

Click here to learn more about these schools. Finally, your EFC is just one factor used by colleges to decide how much financial aid to offer students. If you know your EFC, but would like to know how much the colleges on your list might offer in financial aid, start researching costs with a free Edmit account today.

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