On one hand, there are those who plan to pay the entire tuition bill. On the other hand, there are parents who will pay only a portion of their child’s college expenses.
On the third hand, okay, I don’t know anyone with three hands, but stick with me. On the third hand, some parents don’t plan to drop a dime on their child’s college education. That’s fine by me.
You see, it doesn’t really matter which of the three camps you fall into. If your child goes to college, there’s a high probability that the school will hit you up for money. They won’t call the house while you’re having dinner or knock on your door on Saturday morning, but they do expect you to make a contribution to your child’s education.
The Expected Family Contribution is coming for you
The Expected Family Contribution (EFC) is the amount that a college will want from your family before it offers need-based financial aid. If you’re thinking that amount is a big fat zero, think again. The EFC is the minimum amount the government determines you can afford to pay towards college. The calculation is based on your income, certain assets, and your household makeup.
Even if your family is drowning in debt, it doesn’t mean that you won’t have an EFC. The calculation doesn’t consider debt–a factor that is especially disheartening to parents faced with their own student loans.
What is this need-based financial aid you speak of?
The term “need-based” may sound like aid for only low-income, or no-income families, but it’s actually relevant for families at various income levels. A deeper look at how the Expected Family Contribution works may help.
The EFC is not the amount your family must pay for college. No school can raid your bank account, pick your pocket, or pawn your television to cover tuition, or at least they can’t as of the time of this writing. Your child’s school of choice will use the EFC to determine how much need-based financial aid your child qualifies for. To do this, the school will subtract the EFC from the cost of attending their school, more formally known as the Cost of Attendance (COA).
Tuck this simple formula in your head, and never let it go:
Cost Of Attendance – Expected Family Contribution = Financial Need
For example, let’s say your child is chomping at the bits to attend BigBank University at a whopping $40,000 per year. Your Expected Family Contribution is $15,000 per year. That leaves $25,000 in unmet need, more importantly, it’s the amount of need-based financial aid your child may qualify for.
Don’t let the numbers intimidate you
I don’t know about you, but the figures in the above example made my stomach flip. Too many zeros, if you ask me. Don’t be a victim of college savings anxiety, and don’t wait for BigBank University to crunch your numbers. Knowing where you stand, even if it’s scary, gives you more power than blissful ignorance.
If you’ve got a while before your child heads to college, estimate your Expected Family Contribution by visiting BigFuture, Adventures in Education, or another EFC calculator. Once you know the minimum amount of money that colleges expect from your family, you can work towards saving up the dough.
If your child will attend college in less than a year, get the to the Free Application for Federal Student Aid (FAFSA), pronto!
Readers: How does the Expected Family Contribution make you feel…on the inside?
If your child started college today, what would they study? (Today, my little worms would probably major in book tossing and bubble blowing.)