Expected Family Contribution

The idea behind the EFC was simple: families with more resources should pay more, and families with fewer resources should be offered more help. The figure came from the information filed on the Free Application for Federal Student Aid, known as the FAFSA.

It was not a bill and not a promise of what a college would charge, only a yardstick used to measure need. The formula weighed parents' income and assets more heavily than the student's, and it allowed for things like taxes, an allowance for basic living costs and the number of family members.

Assets such as savings and investments counted, while some items, like retirement accounts and the family's main home, were generally left out of the federal calculation. Because the rules were set by the federal government, they were applied to every applicant in the same way.

Once the number was known, a financial aid office used it to build an aid package. The college subtracted the EFC from its cost of attendance, which covers tuition, housing, books, transport and personal costs, and the remainder was the student's financial need.

Grants, work-study and loans were then offered up to that amount. The nuance is that the EFC was not always what families actually paid.

A college might meet only part of the need, or might use its own formula for its own grants, so the real cost to a family could be higher or lower. Also, US federal student aid has since moved to a revised calculation called the Student Aid Index, which replaced the EFC term, so the older name now appears mostly in historical material and older planning guides.

For anyone outside education, the term is a good example of a need-based allocation formula. The same logic of measuring ability to pay, then filling the gap, appears in sliding-scale fees, subsidised childcare and some insurance schemes.