THE AMOUNT YOU’RE EXPECTED to pay toward college costs is reflected in a number known as EFC, or expected family contribution. Many parents are shocked by how much they’re expected to cough up each year toward college costs. You can calculate your expected contribution under both the federal and institutional aid formulas using the EFC calculator available at CollegeBoard.org.
Let’s say your EFC is $15,000 a year. If your teenager goes to a college that costs $20,000, you should receive $5,000 a year in financial aid. What if your kid goes to a $50,000-a-year college? You should receive $35,000 in aid.
That suggests you shouldn’t dissuade your children from applying to colleges because they appear to be too expensive. Sure, if a college costs less than your expected family contribution, your out-of-pocket cost will be less. But if your teenager is choosing between two colleges, one that costs $2,000 more than your EFC and another college that costs $20,000 more, you should—in theory—be indifferent, because your out-of-pocket cost will be the same.
In practice, a lot will depend on the composition of the aid package. If the more expensive college offers an aid package that includes a substantial amount of student loans, you may want to favor the less costly college rather than send your children out into the world burdened by debt. In addition, not all colleges offer aid packages that fill the full gap between your EFC and the college’s cost, and that could leave you scrambling to make up the shortfall.
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