Last Updated Oct 17, 2011 10:58 AM EDT
If you've got teenagers who expect to attend college, knowing your Expected Family Contribution is critical.
The good news is that it's easy enough to generate your EFC and you'll learn shortly where you can obtain it.
First though, here's the definition: An EFC is a dollar figure that represents what a family is expected to be able to afford to pay for one year of a child's college costs. Financial aid methodologies are used to calculate a family's EFC.
EFC RangesIf you are making less than $30,000 a year, it's highly likely that your EFC will be $0. That signifies that you can't afford to pay anything for college.
In contrast, there is no EFC ceiling for wealthy families. A top executive of a national restaurant chain once told me that his EFC was $108,000. That means he should be able to pay $108,000 for one year of his daughter's college education. Of course, no college -- at least not yet - costs that much so he wouldn't have to pay that.
In cases where an EFC is high, families can look for schools that provide merit aid to wealthy students. Most private and state colleges and universities fall into that category. Families with low and medium-sized EFC's should look for schools with generous financial aid practices.
Finding Your EFCYou can find your preliminary EFC by heading to the College Board's website. In the upper right-hand corner just type EFC calculator into the search box. You'll need your latest income tax return and non-retirement account statements to use the calculator. It should take just a few minutes to obtain your EFC.
Even with your EFC, you won't know if you might qualify for financial aid unless you compare the figure with the price of a college.
Let's say your EFC is $25,000 and your child applies to his local state university that costs $15,000 a year. Since your EFC is higher than the cost of the university, you would receive no need-based financial aid.
Just because you don't qualify for need-based aid at a relatively inexpensive school, however, doesn't mean you won't receive money from an expensive college. For example, Amherst College's cost of attendance is nearly $58,000. A family with an EFC of $25,000, could qualify for up to $33,000 in financial aid.
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Lynn O'Shaughnessy is author of The College Solution, an Amazon bestseller, and Shrinking the Cost of College workbook. She also writes her own college blog at The College Solution.
EFC image by trekkyandy. CC 2.0.