Calculating the EFC

Mandy PetersonMarch 8, 2007

Need Analysis Overview

Need Analysis Overview/Financial Need

Need analysis. Overall process of determining a student’s financial

need and eligibility for certain programs. Generate the EFC.

EFC is a measurement of a family’s ability to contribute toward education cost.

Need Analysis Overview/Financial Need

Need Equation:

Cost of Attendance

-- Expected Family Contribution

Financial Need

Need Analysis Overview/Financial Need

General elements of need analysis. Information reported by the family.

Income. Number of dependents. Number of family members attending college. Assets. Marital status of the student. Age of older parent of a dependent student.

Need Analysis Overview/Financial Need

General elements of need analysis. Items considered by federal methodology prior to

EFC calculation. Additional expenses incurred. Income and asset protection allowance.

Need Analysis Overview/Financial Need

General Elements of need analysis. Dependency status.

Independent-student definition. Age 24 or older as Dec. 31 of the award year. Orphan or ward of the court. Veteran. Graduate or professional student. Married student. Student with legal dependents. Person with unusual circumstances. Active-duty members of the armed forces.

Need Analysis Overview/Financial Need

General elements of need analysis. Dependency status.

Dependent-student definition. All other students not referenced in the previous

slide. Must use parental information in determining

EFC.

Need Analysis Overview/Financial Need

Federal methodology. Only methodology for determining EFC. Three models under FM. Three formula options exists under FM.

Need Analysis Overview/Financial Need

Components of federal methodology. Regular formula.

Income. Allowance against income. Assets. Education savings and asset protection allowance.

Need Analysis Overview/Financial Need

Components of federal methodology. Simplified-needs test.

Assets not considered. Eligibility for simple formula.

Benefits from a federal means-tested program. AGI less than $50,000.

Need Analysis Overview/Financial Need

Zero expected contribution. AGI below $20,000. Parents of dependents must be eligible to file 1040A

or 1040EZ or not be required to file a federal tax form.

Need Analysis Overview/Financial Need

Guidelines for divorced or separated parents. Rule 1. Rule 2. Rule 3.

Guidelines for remarried parents.

Need Analysis Overview/Financial Need

Definitions in Need Analysis (pages 5 – 7)

Race to Calculate the

EFC

EFC Calculation What is an EFC? Why do you need to understand the EFC formulas?

EFC Calculation Which EFC worksheet should be used? What is Mario’s EFC?

0

40,550

40,550

0

0

0

40,550

41,500

40,55017,500

24,000

3,394

406

1,339

1,836

18,680

6,125

3,200

28,855

40,550

28,855

11,695

11,695

2,573

1

2,573

11,695

5,000

5,000

5,000

0

0

0

5,000

0

5,000

0

0

383

0

3,383

5,000

3,383

1,617

809

2,573

809

3,382

Calculating the EFC

Mandy PetersonMarch 8, 2007