Thoughts about EFC and How to Graduate from College Debt-Free

I've been writing a lot about paying for college, because I've been learning a lot about the topic. As I recently explained, when you file the FAFSA, you'll get a number called "EFC," which stands for "Expected Family Contribution." Your EFC is the amount your family is expected to be able to contribute to your child's college costs.

A few days ago, in a Facebook group about getting into and paying for college, one of the members described EFC as the amount your family is expected to come up with via three sources, i.e., savings, current earnings, and loans. It is not a number you are supposed to be able to just afford out of pocket.

This is the best explanation for EFC that I've ever come across.

Unfortunately, nothing can change the sticker shock that most people feel when they see their EFC for the first time. If your child is too young to apply for college but you want to get an idea of what your EFC might be, there are many EFC calculators out there that you can run.



It helps a little if you understand a few things about the formula used to calculate your EFC. You can read the 2020-2021 EFC Formula PDF, which is 36 pages long. If you don't want to try to make sense of the words and numbers on your own, then understand that for an average to upper middle class family, EFC includes a little less than half of parental income, upwards of 6% of parental savings, half of the student's income, and 20% of the student's savings.

Basically, for most families, the most important factor in calculating the EFC is the parents' income. While there are some things you can do ahead of time to minimize your EFC (e.g., minimizing your student's savings), unless you're going to take a huge pay cut, there isn't a whole lot you can do.

My conclusion, after a couple of years of research: If you're determined, as we are, to have your student graduate from college without any debt, the best things you can do are save (and save and save), have your student earn great grades and test scores to maximize merit scholarship opportunities, know how much you are willing to pay regardless of what your EFC is, and target schools that come in at that range. The last step is the trickiest, because it's hard to accurately predict what a school's financial aid offer will be.

I recommend using net price calculators (NPC), as well as identifying schools where your child is in the top 25% of applicants (try CollegeData to find such schools). Each school has an NPC somewhere on its website - you input the data requested, usually including your EFC, child's GPA and test scores, and the calculator will show you an estimated financial aid package that includes projected merit scholarships.

It's definitely not going to be easy to find a way for our children to graduate from college without any debt, but I'm hoping that by starting early, we'll make it happen.