On tax form 1040 if my parents have non refundable tax credits of $2,500, how will this effect the students EFC for the upcoming year? Will it lower or raise the EFC?
No effect.
It doesn’t automatically have no effect though. You need to put that amount in answer to question 93a. That amount will be added to the answer to question 86, fed tax paid, so your parents will get ‘credit’ for the amount of tax they would have owed without the AOTC. If you don’t do that correctly, it would raise your EFC from what it should be.
https://fafsa.ed.gov/fotw1516/help/fotw36e.htm
The DRT will automatically fill in question 93a but if you file an estimated fafsa before taxes are done, you need to do it manually.