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Financial Aid 101

2. Federal Methodology (FM). System used to calculate expected family contribution (EFC)Assesses ability to pay Consists of two steps:Measures a family's financial strengthAssesses a part of family's financial resources as being available to contribute toward educational costs. 3. How is EFC Det

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Financial Aid 101

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    1. Financial Aid 101 Need Analysis June 2009

    2. 2 Federal Methodology (FM) System used to calculate expected family contribution (EFC) Assesses ability to pay Consists of two steps: Measures a family’s financial strength Assesses a part of family’s financial resources as being available to contribute toward educational costs

    3. 3 How is EFC Determined? Three FM models Dependent student Independent student without dependents other than a spouse Independent student with dependents other than a spouse Three distinct FM formulas Regular Simplified Automatic zero

    4. 4 Factors that affect EFC Number in Household Number in College Taxed and Untaxed Income Taxes paid Assets and Investments Age of the Older Parent Number of Wage Earners

    5. 5 EFC Components Parents’ Contribution (PC) consisting of: Contribution from parents’ available income (AI) Contribution from parents’ assets Student’s Contribution (SC) consisting of: Contribution from student’s available income (AI) Contribution from student’s assets

    6. 6 Treatment of Income in FM Total Income: Base year income from all taxable and untaxable sources - Excludable income (i.e., education credits, child support paid, taxable earnings from FWS or other need-based work programs, as listed on FAFSA Worksheet C) = Total Income

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