<p>*Quote:
It is NOT the amount a family is expected to contribute. </p>
<p>=================</p>
<p>finaid.org disagrees with you</p>
<p>Quote:
Expected Family Contribution (EFC): The amount of money that the family is expected to be able to contribute to the student’s education<br>
*</p>
<p>However…
From the FAFSA website:</p>
<p>*Note: 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. It is a number used by your school to calculate the amount of federal student aid you are eligible to receive.
*</p>
<p>So, although the Feds are well aware that EFC is not the amount that a family will have to pay nor is it an indication of how much college aid you’ll get, they continue to use that misleading acronym.</p>
<p>This looks as good a thread as any for what could be a dumb question, or a really
smart one. </p>
<p>Does the cost of 5 years at an engineering school that runs 40K a year add up to
240,000?
I arrived at this number by breaking down each year as follows:
20,000 cash plus 20,000 in 10 yr loan at 7 percent (the total sum of money for the 20,000 loan is 28,000).</p>
<p>Thanks!</p>
<p>^^^</p>
<p>First off, that’s a RIDICULOUS and unnecessary amount to consider borrowing. Even one-fourth of that amount is toooo much.</p>
<p>Loan Calculator</p>
<p>Loan Balance: $240,000.00<br>
Adjusted Loan Balance: $240,000.00<br>
Loan Interest Rate: 7.00%
Loan Fees: 0.00%
Loan Term: 10 years
Minimum Payment: $0.00 </p>
<p>**Monthly Loan Payment: $2,786.60 ** Oh my! how would you pay THAT?
Number of Payments: 120 </p>
<p>Cumulative Payments: **$334,392.61 ** </p>
<p>Total Interest Paid: ** $94,392.61 **</p>
<p>Note: The monthly loan payment was calculated at 119 payments of $2,786.60 plus a final payment of $2,787.21.</p>
<p>It is estimated that you will need an annual salary of at least $334,392.00 to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. This corresponds to a debt-to-income ratio of 0.7. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $222,928.00, but you may experience some financial difficulty</p>
<p>I agree, they should change the name. It makes people who have very low EFCs really think they will not have to borrow anything or not pay anything (like if they have an EFC of 0). In reality, unless the student goes to one of the few full need schools or is something like a NMF, they will end up paying more than EFC. And for those on the wealthier side, but not actually wealthy, the EFC is generally a lot more than a family can actually afford. That leads to choosing schools where COA is less than EFC or where the kid gets enough merit aid to make the school affordable. I know we have no way to pay EFC so d luckily got a full tuition scholarship plus a small stipend and the amount we pay for Room and Board and books and miscellaneous is less than our EFC. It is a stretch to pay that and it would have been impossible for us to pay EFC. And yes, I really do mean that when I have to tell the younger I can’t afford $75 a month martial arts lessons.</p>