How Much Will College Really Cost Your Family? Decoding the EFC Formula
Let’s demystify the Expected Family Contribution (EFC) — now called the Student Aid Index (SAI) — so you can understand what impacts financial aid eligibility and how to plan accordingly.
Hello Discerning Parents and Future Graduates,
Today, we delve into another essential chapter in our guide to mastering the financial maze of funding higher education. For all the Jills and Jacks navigating the delicate balance of funding their children’s education without jeopardizing their own retirement dreams, this one’s for you.
If you’ve ever plugged numbers into FAFSA and gasped, you’re not alone. The Student Aid Index (formerly EFC) is how the federal government decides your family's need for financial aid. The formula may seem clinical, but the implications are deeply personal.
Here’s how it breaks down:
- Parent Income (after allowances for taxes and basic living needs) is assessed at 22–47%.
- Parent Assets (excluding retirement accounts and primary residence) are assessed at 2.6–5.6% after an age-based protection allowance.
- Student Income is assessed at 50%, and Student Assets at a painful 20%.
Let’s be clear: income weighs far more heavily than assets in most cases. A family earning $150,000 annually with no reportable assets might still be on the hook for $25,000+ per year at a public in-state college.
Want to estimate your number? Use the Federal Student Aid Estimator.
But knowing your number is only half the battle.
Planning Pro Tips:
- Grandparent-owned 529 plans no longer hurt aid eligibility — a big win under the new FAFSA rules.
- Small business owners, beware: you now have to report your net business value, even if you’re the only employee.
- The number of kids in college at the same time no longer splits your family contribution — yes, ouch.
Understanding how your financial profile affects aid eligibility puts you in control. The Student Aid Index isn’t just a number — it’s a starting point. The earlier you plan, the more strategic (and less surprised) you’ll be.
Until we decode more strategies for your financial success, remember, a thoughtful plan today illuminates the path of tomorrow. Eager to start crafting your family’s financial future? Schedule a Getting Acquainted Call with me. Together, we’ll tailor a plan that not only meets but exceeds your aspirations. Secure your spot today, and let’s turn planning into action.
Warm regards,
Julie Bray
Your Family’s College and Retirement Champion
GW Financial, Inc.
This content is developed from sources believed to be providing accurate information and is provided by GW Financial, Inc. It is not intended to be used as investment, tax, or legal advice. The information presented is for general education and informational purposes only and should not be construed as a solicitation or recommendation. Please consult with a qualified professional regarding your specific circumstances.
