Costliest Mistakes: Mis-Understanding What The Colleges Will Expect You To Pay

Your Expected Family Contribution (EFC), is THE most important number for you to know because it is how much the colleges will expect you to pay for college.

All schools use it as a starting point for making their decisions about how much you’ll be expected to pay to attend their college.

EFC is the number that the Department of Education calculates once your FAFSA has been filed.

EFC is the MINIMUM
(not maximum – that’s right you may actually pay more) out-of-pocket money the schools will expect you to come up with for the year.

Unfortunately, colleges don’t generally care whether or not you can actually afford your EFC. However, the good news is that your numbers have been calculated using the same formula as everyone else’s.

All schools use this formula to determine if you have financial aid need: Cost of Attendance – EFC = NEED

If your EFC is lower than the cost of attendance, you have financial aid need.

If your EFC is higher than the cost of attendance, you don’t.

Your EFC is calculated using the student and the parent’s income and assets. It is also influenced by things such as number in family, number in school and the age of the older parent.

Once your colleges know what your need is (if any) then they can begin filling the gap or “meeting your need” with need-based financial aid. As a general rule, colleges expect families to pay their EFC at a minimum.

Financial aid does NOT exist to pay your portion of the college bill. It is designed to fill the gap between what the school expects you to pay versus what the school costs to attend.

If you have Need, colleges can then choose to meet all, or any part of your need with aid (or none at all) – it is completely up to the school. Some colleges will meet ALL of a student’s need, and some will meet as little as 20%.

Now, if you DON’T have financial aid NEED, you can still qualify for help to pay the college bill. If you want help with the bill, then your student needs to choose colleges where he or she has an opportunity for MERIT-based scholarships.

Bottom Line: Your Expected Family Contribution (EFC) is the single most important number when it comes to planning for college!
So, what is my advice for you?

Don’t simply “Hope for the Best” – YOU NEED TO KNOW YOUR EFC if you want to develop a plan to target the right schools for you!

Applying to a list of colleges that you can’t afford will not do much to protect your wallet, your retirement or your savings.

What good is a college that is a “right fit” if you can’t pay the bill?

Your Smart Plan For College Assignment:

You need to figure out your Expected Family Contribution or EFC. This will let you know whether you are an All Need, Some Need or No Need Family.

Knowing which type of family you are allows you to develop strategies for your situation. The types of colleges you should be considering and the strategies you’ll need if you are a NO Need family are very different than if you’re an ALL Need Family.

Knowing what to expect and tailoring your college plans accordingly is essential so that you don’t end up settling for less when it comes to college.