Your EFC Number Demonstrates Exceptional Financial Need – Zero EFC is the Best Number
How Do You Interpret Your 2015 EFC Score with Financial Aid?
If your adjusted gross income is $24,000 or less for the 2014 base year, you have an automatic EFC 00000. Important, this does not mean you pay nothing for college, read further to understand why.
Secondly, if your income is $49,999 or less you qualify for the “simplified needs test” which means both the parent’s and student’s assets are not counted in the EFC calculation.
There are two additional conditions of which one has to be met for the simplified needs test(in addition to the income qualification).
Anyone considered in the parent “household size”who received designated means tested federal benefits OR the parent was eligible to file IRS Forms 1040A and/or 1040EZ. In addition, anyone not required to file an income tax return or the student’s parent became a “dislocated worker”
Colleges use your EFC number to determine your financial aid need compared to other applicants that will be attending their school.
What is a Good EFC Number?
The lower your EFC score the greater your financial need. The lower your score the better your chances for financial aid which usually consists of grants and loans.
Basic formula, total cost of attendance minus your EFC number equals your family financial need.
When your score is o0000 colleges consider your financial aid need “exceptional” and often times use the term “full-need student” (not to be confused with “need met” by each college explained below).
What does your EFC number mean if it is not 00000?
[Strategy Alert]: As referenced above, your EFC number is subtracted from the total cost of attendance of each school to arrive at a financial need number. However most schools do not meet 100% of your financial need number when they provide you with a financial aid award.
Learn about what financial need met means and how your EFC number integrates into a percentage formula.
Even families with an EFC of Zero can end up with a funding gap. Say the school only meets 70% of financial need, that means as a general guideline the family will be probably responsible for 30% of the total cost of attendance.
Note, when the school values the student they might meet 100% of financial need, or 90% so again these are just guidelines but great “student positioning” with the right school can yield 100% offers. But at the same time the school may choose to provide a very low percentage of financial need.
If you have an EFC of $20,000, the college meets 70% of financial need, this leaves you with 30% of unmet need (Example, total cost $40,000 less EFC equals financial need of $20,000 times 30% unmet need $6,000.
So your theoretical out of pocket costs would be your EFC $20,000 plus unmet need of $6,000 equals $26,000.
Unfortunately the actual financial aid awards can vary because the average need met is an average number for the student population (incoming freshman and upperclassmen) at the school.
EFC Families 00000 Eligible for Federal Aid Programs
These applicants are eligible to receive “needs based financial aid” and can qualify for certain favorable federal educational assistance programs.
- Pell Federal Educational Grants (money that does not have to be paid back)
- Federal Work-Study Program (does not count as financial aid income for student)
- Perkins Loans
- Subsidized | Unsubsidized Stafford Loans
You will see these programs in the financial aid award example below.
Financial Aid Award EFC 00000 Family Flagship State School
|Award||Financial Aid Description|
|Subsidized Direct Loan||$3,500|
|Federal Perkins Loan||$2,000|
|Unsubsidized Direct Loan||$6,000|
|Federal Pell Grant||$5,645|
|Scholarship Student Won||$2,000|
|Federal Work Study||$2,000|
|Total Cost of Attendance||+$43,500|
|Less Total Financial Aid Award||-$25,145|
|“Unmet Need”||“Funding Gap”||$18,355|
[Strategy Alert]t: The above family contacted us after they lost their initial appeal. They joined our Coaching Program where we prepared their appeal. The family received an additional $9,500, $6,000 was College Free money – grants. In addition, this school only meets 65% of financial need and this award is heavy in loans. The family was totally unaware of this need met percentage assuming with a zero EFC their out-of-pocket costs would be minimal.
Your School Must Be Title IV Eligible to Receive Pell Grants
Most schools are but some are not so you need to check this out.
An EFC of 0000 would qualify for up to the 2015-2016 academic year maximum of $5,775.
Pell Grants are awarded based upon;
- Financial Need Expected Family Contribution Number
- Enrollment Status
- Cost of Attendance (If this is lower than $5,775 then you will not receive the full amount even though your EFC 0000 would qualify because the grant is only eligible up to the total cost of attendance until the maximum is reached).
What Are Perkins Loans?
- Available for students with exceptional financial need (EFC 0 qualifies),
- No interest rate is charged while the student is in school at least half-time,
- Repayment starts 9 months after graduation.
- Available for both undergraduate and graduate study,
- Maximum loan amount per year / aggregate maximum undergraduate $5,500/$27,500 and graduate, $8,000/$60,000.
You Will Be Offered Stafford Loans – You Don’t Have to Accept
You will be guaranteed a Stafford Loan; it will probably be a subsidized Stafford that provides better loan provisions up to the maximums listed below.
Stafford Loan eligibility differs from Pell Grant as you only have to be enrolled or plan to be enrolled half-time.
Apply As Early Each Year As You Can Before Priority Aid Deadline
Each year in college you will be required to submit your Financial Aid Application (some privates also require CSS Profile). It is important to determine if there are any early deadlines for the CSS Profile.
For CSS Profile make sure you file before the schools Priority Aid Deadline date which is the day the college starts building financial aid packages.
Best Practice for the FAFSA is to file as soon after January 1 as possible so you are at the front of the line. Schools process incoming freshman packages first then move on to upper returning students.
Once your FAFSA is processed you will receive a Student Aid Report that shows your processed EFC number.
An asterisk will appear next to your EFC number if you are selected verification.
There are EFC codes inside the the SAR Report some will require action on your part to correct mistakes/incorrect information.
State Funded | Institutional Funded Financial Aid
You may also be eligible for funds directly from your school. Regardless of you EFC number you can only project the amount of financial aid you will receive based upon the historical giving pattern of the respective school.
If you have questions please fee free to contact me.
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