EFC?

I didn’t want to hijack another thread so I thought I’d ask this question. Why can’t colleges and the federal government change this misleading terminology. When you fill out the FAFSA you get a student aid report. That seems fair. The information goes to the university who then determines your net cost based on the aid they are willing to give you. The university can give you your net cost based solely on information provided through the FAFSA or by separate or additional information. I see no reason for the term “expected” family contribution. It means nothing and usually results in confusion and I think contributes to some families putting themselves into precarious financial situations.

Yes, maybe something like Pell eligibilty index might be better?

I think with the FAFSA EFC the college sees right away if the number is 0, they go into the highest need pile, eg SEOG, work study, Perkins loan, full amount of sub loan, full state grant eligibility.

Then other students under $5k EFC also get some Pell and maybe state funding, but nothing more, except possibly work study and sub loan.

The students over $5k EFC then often only get loans, at least at public schools. Maybe state funding. Some private schools might give institutional grants to bridge the gap.

But basically people need to understand that FAFSA EFC is not what they have to pay for college.

The cost of college is published rates for tuition, fees, room and board (if living on campus) minus all aid you qualify for. You might get merit based on academics or talent, federal or state aid based on FAFSA EFC, college grants if they are generous for your income level, or only loans.

Doing net price calculators on college websites can give you an idea what aid or merit a school might be able to offer.

What you have to pay could be more or less than what your FAFSA EFC is.

For example a school costs $30,000 but the student gets a $20,000 merit scholarship. Based on EFC of $10,000 they qualify for a $2,000 state grant. The student gets $2,000 outside scholarship.

So now you don’t pay the EFC of $10,000 but $6,000 remaining cost after merit and state grant, much less than EFC.

Or the school costs $20,000 and the student gets $2,000 merit, The EFC is $6,000, too high for Pell, but eligible for a $3,000 state grant. So now the remaining cost is $15,000, much more than the EFC.

It is just a reference number anyway.

Over the years, this has been discussed many times. The acronym EFC is a misnomer since it wrongly confuses people into thinking, “this is what I have to pay.” Later they sadly learn that it’s just some crazy federally calculated number, and of course, the Feds have no power to exert over the colleges to force them to cover the rest…because in most cases, the colleges don’t have the money to do so.

People need to take responsibility for their own financial literacy at some point. Is my adjusted gross income on my tax return my ACTUAL gross income? of course not. It’s a number which is reached via a formula which has inputs and outputs-- some of which make logical sense and some of which don’t. Is the actuarial calculation of my lifespan which I had to figure out in order to withdraw money from an inherited IRA the actual date I’m going to die? Is the risk factor that priced my disability policy the actual way I’m going to become too compromised to dress myself or feed myself? Of course not.

Things in life have wonky nomenclature attached to them and it’s not too much to ask people to spend an extra 15 minutes learning what the nomenclature means. Low fat cookies can still make you fat, right? This isn’t rocket science.

There are all kinds of terms used that aren’t precise. Athletic scholarships are actually called Grants-in- Need. Some grants are merit based, some need based. Same with scholarships. Call it whatever you want, as long as it reduces my costs. Full Ride is another term used in different ways by different people. Even Financial aid means different things. Is a loan really financial aid? Is a merit award?