Confused by financial aid? Here’s your first steps.


Calculating your EFC should be one of the first steps you take in your college search process; either your sophomore or junior year of high school. Understanding your EFC early will allow you to successfully plan college finances along with giving you clarity on how much college could cost you.

When talking about Financial Aid, there are a few foundations pieces that are key to understand before we even start tp understand what Financial Aid your student could receive. Knowing how much Financial aid they could receive is vital to know before you start to look at potential colleges…. unless you have an unlimited amount of money or don’t care how much debt your child takes on. (I’m guessing neither of those statements are true for you)

Let’s tackle a few of the basic questions.

  1. What is an EFC?

The EFC (Expected Family Contribution) is a number used to determine your student’s financial aid eligibility. It is a number calculated from the FAFSA (Free Application for Federal Student Aid) using a federal formula.

    Who uses your EFC and why?

The federal government and colleges use this number to determine how much you should be able to pay, every single year, for college either by paying out of pocket or with a loan. (I’m so glad that they decide how much I should pay every year… how helpful *sarcastic*) 

If your EFC is too high, you will not be eligible for any federal grants. That means, as you are planning for future college costs, you should seek to reduce your overall EFC. This can be done by reducing the value of assets looked at by the FAFSA. Interested in learning tactics we use to do that? Be on the lookout for our upcoming FAFSA walkthrough course that gives a detailed walkthrough of the FAFSA.


  1. What is “demonstrated need” and how is it determined?

Demonstrated need, is the remaining cost of school attendance after your EFC is subtracted. 

Cost of College/University

    – EFC

= Demonstrated Financial need


Cost of private university                                                     $45,000

Your EFC (based on $125,000 family income)                  – $24,500

Demonstrated Financial need                                           = $20,500

Once your demonstrated financial need is determined, colleges can then choose to extend need based financial aid to cover all, some or none of your remaining need. Note: No matter how large your EFC number is, it does not preclude you from gaining large merit based scholarships from colleges and universities.


When should I calculate my EFC?

Calculating your EFC should be one of the first steps you take in your college search process; either your sophomore or junior year of high school. Understanding your EFC early will allow you to successfully plan college finances along with giving you clarity on how much college could cost you.

Tip: Determine your EFC and budget before you look at schools. This will prevent potential disappointment when building your school list. It’s like telling your son or daughter to pick a first car without giving them a budget. You would never do that… so don’t do it for a purchase that will be multiple times more expensive.

To be clear, this will be a non official EFC that you will use for your college planning. Your official EFC will be determined when you fill out the FAFSA after it opens during your students senior year of High School. 


How do I calculate an estimate of my student’s EFC?

Step 1. Gather the right documents

    -Social Security numbers (Parents and students)

-Drivers License (if applicable)

-Tax records (Parents and students) from two years ago

           2021 FAFSA will use your 2019 taxes

           2022 FAFSA will use your 2020 taxes ect. 

    -Records of your assets
      • -Savings and Checking accounts
    -Investment values (not including retirement accounts)
    -Real estate values
    Step 2. Create a College board account 

    You can feel free to use your students account or parents can also create their own College board account.

    Feel free to use this link to create the account >>> Link <<< 


    Step 3. Calculate your EFC using the College Board EFC Calculator.

    Some things to keep in mind as you complete the College Board EFC Calculator:


        • Please also be sure to provide a close estimate of your current liquid assets. They do not need to be exact for this form. They will need to be accurate for the FAFSA!
        • Please be sure to enter your contributions to retirement (pension and savings plans) under Untaxed Income. 
        • Note: It is not necessary to provide the value of your retirement account(s) as this information is not used to calculate your EFC. 
        • It is not necessary to include assets in a small business that a family owns and controls (owns more than 50%). The small business must have less than 100 employees. The family members may include relatives by birth or marriage. 
        • If the student’s parents are divorced, be sure to use the financial information for the custodial parent (and spouse if married). The custodial parent is the parent with whom the student lives with for at least six months and one day. 
        • DO include a 2nd home (minus the mortgage balance). 
        • DO enter the total 529 savings for all of your children as a parent asset. 
        • DO enter UGMA or UTMA accounts as a student asset. 

    When you have gathered all the right documents, go ahead and use College Boards EFC calculator. You can find it here.  >>>> College Board EFC Calculator 


    Be prepared to spend 20-25 minutes filling in information.


    Step 4. Information is power


    Now that you have your estimated EFC, you know the base amount per year that you will have to pay towards your students’ college education.


    Remember the equation:


    Cost of College/University

    • EFC

    = Demonstrated Financial need

    Now that you have your EFC in hand, you will have a ballpark figure of your Demonstrated Financial need. This Demonstrated Financial will need to be fulfilled in some way; via merit scholarship(s), need-based financial aid, student loans or out of pocket payments.


    Concerned or confused? Yeah, we get that. Every year, we work with hundreds of clients through their college search process. As you can see, this process has alot to it and has many potential pitfalls that can cost you a lot of money… or cause your student to go into massive student debt. We don’t want either of those outcomes. 


    Let us help you. If you go to the top of the page, on the right, there is a button titled “Let’s Talk”. Click that button and set up a Free 30 min consultation to have your biggest questions answered and see if there are ways we could serve you and your family.



Let us de-mystify financial aid for you!