Editor’s Note: This article applies to the 2023-24 FAFSA and earlier. The 2024-25 FAFSA, which opened on Dec. 31, 2023, has been revamped and now uses a metric called Student Aid Index (SAI) instead of EFC.
You’ve filled out the FAFSA and received your EFC or tried an EFC calculator.
Now you’re asking, Why is my EFC so high?
Quickly followed by, How can I lower my FAFSA EFC?
Here’s what you need to know.
What Is EFC?
Your EFC is your Expected Family Contribution, the amount of money the government thinks your family can afford to put toward your student’s college education for that year.
So if you have an EFC of $15,000, the government expects that your family can pay for that much of the college bill for the year you’re applying. It’s not the actual amount of money your family will have to pay for college, and it’s not the amount of federal aid your student will receive.
When determining your EFC, the government uses the information provided on your Free Application for Federal Student Aid, or FAFSA. Some of the factors included in the EFC formula are:
- Household size
- Number of kids in college
- Student income and assets
- Parent income and assets
- Age of the oldest parent
The FAFSA asks for financial information from the prior-prior year. For example, the 2023-24 FAFSA requires income and asset information from 2021, which is the “base year.”
The Department of Education offers an EFC formula guide, and you can also estimate your potential EFC by using the calculator from CollegeBoard or the estimator tool from the Federal Student Aid Office.
Take note that the EFC has been renamed to the Student Aid Index as part of the FAFSA Simplification Act. The 2024-25 FAFSA application just opened on December 31 instead of the usual October 1 because of all the changes.
What Is Considered a High EFC?
There isn’t a simple threshold for what is considered a high EFC, because the way your EFC affects financial aid also depends on the college’s Cost of Attendance (COA).
For example, an EFC of $15,000 wouldn’t necessarily be high for a student attending Harvard, which has a COA of over $75,000, but it would be high compared to the cost of a local community college.
If you have a high EFC, it means the federal government thinks your family will be able to cover a bigger portion of your cost of higher education—especially if your EFC is more than the cost of the college your student is attending. In those cases, the government assumes your family can afford all the costs of college.
Changes in Asset Protection Allowance
There is an allowance designed to shield some parent assets from inclusion in the calculations, helping reduce your EFC.
However, the number of assets protected from the calculation has been falling over the past decade.
For the school year 2009-10, parents in their mid-40s could expect to see about $50,000 in assets shielded from EFC calculations. For the 2020-21 year, a 45-year-old (married) parent only saw $5,500 in joint assets shielded.
On the 2023-24 FAFSA, the asset protection allowance dropped to $0 for all parents.
All parental assets are considered in the FAFSA calculation.
In a nutshell: Fewer assets are being shielded in the formula, and that means more of the parents’ savings, investments, and other assets are being included in the calculation.
For many middle-income families, this can mean the loss of need-based financial aid. With more assets being counted as “proof” that a family can afford to shoulder more college costs, EFC is going up for many people.
What Can I Do if My EFC Is Too High?
If your EFC is too high, you may be asking, How can I lower my EFC?
Unfortunately, there aren’t a lot of valid ways to lower your EFC. But you can reduce the risk of accidentally increasing your EFC by avoiding common FAFSA mistakes.
The Impact of FAFSA Mistakes
In addition to changes in the EFC calculation, many families make mistakes when filling out FAFSA, which lead to unnecessarily high EFCs. One common mistake has to do with retirement rollovers.
In previous years, many professionals have advised not to use DRT, the data retrieval tool which automatically pulls information from your taxes. However, one expected change starting in December 2023 is that there won’t a manual option anymore. So it’s not clear yet how to avoid the problem that DRT had of not properly categorizing retirement rollovers, which can grossly overstate your EFC. Be on the lookout for any categorization errors starting in December.
Unfortunately, there are many other mistakes families make when filling out FAFSA. Take your time and read up on common FAFSA mistakes you can avoid, before you delve in.
Should You Still Fill Out the FAFSA?
Even if you have a high EFC, it still makes sense to fill out the FAFSA.
Your EFC might be high enough to disqualify you from need-based aid, like grants, but you might still be able to get federal work-study or get federal student and parent loans.
In order to access federal student loans and other types of financial aid, you need to fill out the FAFSA. In addition, many school-based scholarships use information from the FAFSA to make awards, including merit aid.
Government need-based grants aren’t the only forms of financial aid. Federal student loans and federal work-study programs are also considered student aid. Plus, state programs and school programs are considered financial aid. And, if parents want to use Parent PLUS loans to help out, the FAFSA is part of that process.
So, if you still need money to help pay for school, filling out the FAFSA is important.
Find a College That Can Offer Free Money
You need to be financially strategic when searching for colleges. The amount of free money colleges offer is FOUR times the amount of money given out in private scholarships.
Money given by colleges to students for either need or merit awards (also known as institutional grants) is the second-largest source of free money, the largest being the federal government.
You can focus your student’s college search on schools that are known to be more generous with either merit scholarships or need-based aid.
Whether you need a school that comes close to meeting 100% of need or you want to focus on getting as much money in merit scholarships as possible, you can identify the best schools for your family.
Try our R2C Insights tool to help with this search. The tool allows you to look for schools where your student is in the top 25th percentile.
This means you can easily identify schools where your student is most likely to get free money in either merit scholarships or need-based aid.
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