What Does My EFC Code for Financial Aid Mean?

Kevin Ott
student loans

EFC stands for Expected Family Contribution. The EFC code number you receive after you complete a FAFSA (Free Application for Financial Aid) is the amount your family is expected to contribute for one year (the school year to which the FAFSA applies). While the federal Department of Education uses your EFC to determine Pell and subsidized loan eligibility, colleges vary widely on how they may use your EFC number.

How Your EFC Affects Federal Aid

While colleges do tend to use your EFC to help determine institutional scholarships and loans, determining how your EFC might affect your federal options is easy because the Department of Education has clear and uniform guidelines on how much money you can receive based on your EFC.

Federal Aid Based on EFC

2016-2017
EFC Code
Pell Grant Subsidized Loan Unsubsidized Loan
EFC 00000 $5,815 $3,500 $2,000
EFC 01401 $4,365 $3,500 $2,000
EFC 02426 $3,365 $3,500 $2,000
EFC 03401 $2,365 $3,500 $2,000
EFC 04105 $1,665 $3,500 $2,000
EFC 05235* $0 $3,500 $2,000
EFC 08326 $0 $3,500 $2,000
EFC 10000 $0 $3,500 $2,000
EFC 15000 $0 $3,500 $2,000
EFC 20000 $0 $0 $5,500

*An EFC of 5235 is the cutoff for Pell grant eligibility.

Federal Pell Grant

Federal aid programs, such as the Pell Grant, are fairly predictable. Each year the Department of Education issues an EFC Pell grant chart that lists clearly what Pell grant amount you will receive based on your EFC code.

Keep in mind that a student's enrollment status, such as half-time or full-time, changes the Pell amount for which the student is eligible. (Going to school half-time gets half the amount of Pell grant money.)

Federal Direct Loans

In the federal government's Direct Loan Program, students can receive loans at amounts preset by the government. There are two kinds of Direct Loans: subsidized and unsubsidized. First-year dependent students have a cap of $5,500 in Direct Loans total (both subsidized and unsubsidized). It's important to note:

  • All students, regardless of EFC, can qualify for the Unsubsidized Direct Loan. "Unsubsidized" means the government does not pay the accruing interest for the student while she is in school. This is why Unsubsidized Loans have the same amounts across the board in the examples above.
  • Not all students, however, will qualify for the Subsidized Direct Loan. "Subsidized" means the government pays any accruing interest while the student is in school so that the student does not owe as much when she graduates

How Your EFC Might Affect School Grants

piggy bank

Institutions use a student's EFC as a barometer for a student's financial need. The formula for financial need is a school's Cost of Attendance (COA) minus the student's EFC. Within the COA, schools calculate:

  • Tuition and fees
  • Books and supplies
  • Transportation and personal expenses
  • Room and board
  • Loan fees
  • Miscellaneous expenses related to your schooling such as study abroad, cooperation participation fees, etc.

Determining Eligibility

Institutions that offer grants sometimes use the Pell grant chart or they use a similar EFC chart system to determine eligibility for school-specific grants, but these factors vary at each school.

A common practice, however, is to award a flat amount for each student who has enough financial need to qualify for their need-based grant. The following are a few examples of how a school might use your EFC to determine your total financial aid award.

Merit Awards

It's important to note that your EFC code generally does not affect merit awards. Merit awards are given based on talent in the arts, athletics or academics. However, merit awards may be factored into a student's financial aid package. In addition, depending on the merit awards available, a school may forego a need-based grant in favor of a higher merit-based scholarship. However, this typically won't affect the bottom line, it's just a matter of the school pulling money from different resources.

Financial Aid Package Examples

The following examples below show how a school may look at your EFC to complete your financial aid package. These examples assume that the student is a dependent and going to school full time.

The following examples assume the students are dependents who are first-year students going to school full time. They also assume that the formula the school uses to determine institution-based grants is similar to the Pell grant chart and that anyone who qualifies for need will get it.

$20,000 per Year COA and Few Resources

While tuition at this school is not high, the school has few resources to give students merit or school-based grants. The following examples are how a school might use a student's EFC Code.

Student With EFC 00000

It's important to understand that just because your EFC code is $0, that does not mean the college will give you full financial aid. For example, this student is eligible for:

  • Pell grant of $5,815
  • Federal subsidized loan of $3,500
  • Federal unsubsidized loan of $2,000

The college puts together a need-based grant and uses some merit aid for the student to add another $7,000 to the student's package. (Note: These numbers are arbitrary to give you an idea of how a college might award financial aid.)

The cost of attendance is $20,000 and the total financial aid package, including loans, federal Pell grant and institutional grants is $18,315. Therefore, the students family has to come up with another $1,685. They may do this out-of-pocket (many colleges have payment plans), using outside scholarships or by taking out a loan.

Student With EFC of 03644

college cash jar

A student with an EFC at the same college is still eligible for some financial aid from the federal government:

  • Pell grant of $2,165
  • Federal subsidized loan of $3,500
  • Federal unsubsidized loan of $2,000

The school gives a flat need-based grant to everyone who is eligible for federal financial aid. In addition, the school adds merit aid to the student's package. The merit aid and need-based grant equal an addition $7,000 to the student's financial aid award. (Note: These numbers are arbitrary to give you an idea of how a college might award financial aid.)

$30,000 Per Year COA and Moderate Resources

While this school has a more expensive sticker price, some families may find that it's actually cheaper than going to a school that doesn't necessarily have the resources to help students out financially.

Student With EFC of 01472

A school with moderate resources may be able to give more in merit aid or need-based grants. For example, this student is eligible for:

  • Pell grant of $4,365
  • Federal subsidized loan of $3,500
  • Federal unsubsidized loan of $2,000

The college puts together a need-based grant of $11,000 per year as well as some merit aid of $5,000. (Note: These numbers are arbitrary to give you an idea of how a college might award financial aid.)

The cost of attendance is $20,000 and the total financial aid package, including loans, federal Pell grant, and institutional grants is $18,315. Therefore, the students family has to come up with another $1,685. They may do this out-of-pocket (many colleges have payment plans), using outside scholarships or by taking out a loan.

Student With EFC 08932

What happens when a student's EFC is too high to get a Pell grant? While families can expect to pay more out-of-pocket, a school with moderate resources may still be able to offset some of the cost of attendance. For example, this student's financial aid package could look like this:

  • Federal Subsidized Loan $3,500
  • Federal Unsubsidized Loan $2,000

With the total amount of loans taken out, the student and her family would still have to pay $24,500. The school recognizes that even though the family has a higher EFC, $24,000 per year price tag may still be steep. So they add to the student's package an $11,000 grant and find an additional $1,000 departmental grant, which brings the student's total to $10,500. This is the amount her family might have to pay out of pocket. (Note: These numbers are arbitrary to give you an idea of how a college might award financial aid.)

Note: as the EFC gets higher, the first aid type to disappear is the Pell Grant, followed by the Subsidized Loan, followed by any need-based grant or loan offered by the school. This is a common pattern, though every financial aid award will vary.

$40,000 COA With a Large Endowment

In this scenario, the school has the budget to award a large need-based grant, loan and a large merit-based scholarship. In addition, they have funds to attract top students in various fields to help round out the campus. Consequently, they consider more than just the EFC while deciding on awards, and make a point to offer generous merit-based grants to worthy students.

Student With EFC of 01401

This student qualifies for quite a bit of need-based aid:

  • Pell Grant $4,365
  • Federal Subsidized Loan $3,500
  • Federal Unsubsidized Loan $2,000

After the allotted federal aid, the cost of attendance is still $30,135. Consequently, the school adds:

  • College need-based grant of $17,000
  • College need-based loan of $5,200
  • Merit-based scholarship of $6,500

This brings the student's total cost of attendance down to $1,435. (Note: These numbers are arbitrary to give you an idea of how a college might award financial aid.)

Merit Student With EFC of 20000

Many times, students and families believe that they cannot apply to a school that is anywhere outside of their budget because they do not qualify for need. However, schools with large endowments often have the resources to help fund an entire education. This merit student didn't qualify for any need-based loans or grants. With that said, she has won a national competition, is active in the community in volunteering, and holds leadership positions in two clubs at school. Her financial aid might look like this:

  • Federal Unsubsidized Loan $5,500
  • College-Based leadership Award $8,000
  • College-Based Community Service Grand $5,000
  • Departmental Award from the student's intended major $20,000

All this aid brings the family's total out-of-pocket cost down to $6,500. (Note: These numbers are arbitrary to give you an idea of how a college might award financial aid.)

Disclaimers

scholarships money
  • The EFC codes have been picked arbitrarily as samples spread across a wide range to give a gradual picture of what happens as the EFC code increases. Also, please note that these charts are not meant to be exhaustive lists of every kind of grant and loan that exists. They are only meant to demonstrate how the EFC affects financial aid.
  • The EFC has no effect on merit-based scholarship amounts. The merit scholarship amounts chosen in these examples were chosen arbitrarily to show examples of schools awarding different merit amounts based on either the school's budget or the student's performance.
  • Schools do their best to meet a student's financial need, but not every school has the budget to cover 100 percent of it for every applicant. (Some do, however, and in such cases the EFC truly is accurate.)

How the EFC Code Is Created

The key to understanding need-based financial aid is simple: the difference between your EFC and the total Cost of Attendance associated with your educational plans will determine your financial need.

It's important to note that a school's Cost of Attendance includes tuition, required student fees, student housing, board, textbooks, necessary supplies and transportation to and from school.

So how is the EFC code created?

  • The Free Application for Federal Student Financial Aid (FAFSA) form is used to calculate your federal EFC code. This number is based on a variety of factors, including household income, assets of both students and parents, the size of your family and the number of family members enrolled in college at the same time.
  • If you are considered a dependent student, information specific to your parents' financial situation will be used. If you are independent, your own financial details will be used.
  • If you have a high EFC code, this doesn't mean you can't get any help to go to school. It just means that any federal aid you receive is likely to come in the form of Direct Unsubsidized Loans.

Just because a school is expensive, don't write them off. If the school has large financial resources, you might end up paying less out-of-pocket at that expensive school compared to a cheaper school that has fewer resources for financial aid.

Understanding Institutional EFC Codes

Some schools offer institutional need-based financial aid programs separate from federal student aid. An EFC code is used to determine eligibility for these types of programs as well, but the number is calculated a little differently.

You'll need to complete a FAFSA and any additional financial aid paperwork required by your school to find out what your institutional EFC is, and what it means for your ability to secure private or institutional funding.

These school-specific programs are often designed to help students who are not eligible for much, or any, federal aid, but still need help paying for school.

Factors That Determine Your Aid

Your EFC is not the only factor that determines how much aid or what types of aid you are qualified to receive. Other factors may affect the amount of aid you receive, including:

  • Whether you plan to attend school full-time or part-time
  • The base cost of tuition at your educational institution
  • The mix of products in your aid package

Get an Estimate of Your EFC

While it's not possible to get an exact figure for your EFC code on your own, the College Board provides an online EFC calculator that you can use to produce an estimate. Visit the EFC calculator page on CollegeBoard.org to use this calculator. (And be sure to specify whether you want to see a federal or institutional calculation.)

Do Not Procrastinate

Even if you think you will have a low EFC and plenty of financial aid eligibility, do not delay in filling out the FAFSA and any other financial aid forms your school requires to complete an initial financial aid package for you.

Some federal and institutional programs are first come, first serve, so you want to apply while funds are still available. Ideally, you should fill out your FAFSA in January, using estimated tax information if necessary (which you can correct later with the school once the household has finalized its taxes), and then fill out any school-specific financial aid forms.

Keep in mind, if you estimate your family's tax information on the FAFSA and your estimations are way off, when you correct the FAFSA later to show the accurate numbers, this could change your EFC and your award package.

What Does My EFC Code for Financial Aid Mean?