How To Reduce EFC (FAQs) | 2023

If you filed for Free Application for Federal Student Aid (FAFSA), you must have received a document called the student aid report that contains the expected family contribution (EFC),

This essential financial indicator determines how much financial aid you are eligible for.

Different factors are used when calculating your EFC, such as your parent’s income, assets, family size, the age of the older parent, and the number of family members attending college.

However, for many families, the EFC can be pretty high, making it difficult to afford the cost of college.

Fortunately, there are several strategies that families can use to lower their EFC and increase their eligibility for financial aid. Because, with a lower EFC, you will receive more federal financial aid.

And this will help you to cover your savings and students loans easier

In this blog post, we’ll explore some of the most effective ways to lower your EFC and maximize your financial aid.

What is EFC or Expected Family Contribution?

EFC, or Expected Family Contribution, is an index number colleges use to determine the amount of financial aid you qualify for in the upcoming academic year.

Expected Family Contribution (EFC) is calculated to determine the estimated amount of money that is expected to be covered by a student’s family towards their education for a year.

The U.S. Department of Education provides a unique formula that is used to calculate the expected family contribution,

This unique formula takes into account your family’s income, your family assets, your family size, the age of your older parents, and the number of family members in college.

The EFC is used by colleges and universities to determine a student’s eligibility for federal financial aid and to award institutional aid and scholarships.

The lower the expected family contribution, the higher the student’s financial need, and the more financial aid they may be eligible to receive.

You should also note that the expected family contribution doesn’t define how much you will cover; you could pay significantly less or even more.

As you read on “how to reduce EFC,” also read:

How is the Expected Family Contribution Calculated?

The information you provide on the Free Application for Federal Student Aid (FAFSA) is used to calculate your expected family contribution.

The FAFSA takes into account a variety of factors, including;

  • Your adjusted gross income
  • Untaxed income and benefits
  • Assets
  • Family size
  • Social securities
  • Trust fund values
  • Tax allowances, etc.

The result of this calculation is a number that represents the amount of money the federal government believes your family can contribute to your education expenses.

It is usually in the form of a 6-digit number that may include leading zeros.

For example, if your expected family contribution (EFC) is 000350, your family is expected to pay $350.

How To Reduce Your Expected Family Contributions

It’s important to note that there is no guaranteed way to reduce your EFC, as it is calculated based on various factors, including income, assets, family size, and more.

However, by taking the steps above, you may be able to lower your EFC and increase your eligibility for financial aid.

1. Maximize your deductions and exemptions

This is probably one of the easiest ways to lower your EFC, and it simply involves taking advantage of all available tax deductions and exemptions.

By lowering your taxable income, you can lower your EFC simultaneously and increase your eligibility for financial aid.

Here are some deductions and exemptions to consider:

  • Education Expenses

You can deduct up to $4,000 of qualified education expenses on your tax return, including tuition, fees, books, and supplies.

If you or your spouse is enrolled in college, you may also be eligible for the Lifetime Learning Credit or the American Opportunity Credit, which can provide additional tax savings.

  • Mortgage interest

If you own a home, you can deduct the interest you pay on your mortgage on your tax return. This deduction can significantly reduce your taxable income and lower your EFC.

  • Charitable contributions

If you make charitable contributions to qualified organizations, you can deduct the number of your contributions on your tax return. This can lower your taxable income and reduce your EFC.

  • Health savings accounts

If you have a high-deductible health plan, you can contribute to a health savings account (HSA) and deduct your contributions on your tax return. This can lower your taxable income and lower your EFC.

2. Utilize the simplified needs test

The simplified needs test is a formula used to calculate the EFC for sure low-income students.

If your family’s income is less than $50,000 and you can file a 1040A or 1040EZ tax form, you may qualify for the simplified needs test.

This test ignores assets and only considers income when calculating your EFC, which can significantly lower your EFC.

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3. Consider strategic asset allocation

The EFC calculation does not include assets such as retirement accounts and primary residences.

By strategically allocating your assets, you can reduce your EFC without impacting your overall financial security.

Here are some tips for strategic asset allocation:

  • Maximize retirement contributions

Contributing to a retirement account can lower your taxable income and reduce your EFC. Additionally, retirement accounts are not counted as assets when calculating the EFC.

  • Pay down debt

If you have high-interest debt, such as credit card debt, paying it down can lower your taxable income and reduce your EFC.

  • Consider a home equity loan.

If you own a home, you may be able to take out a home equity loan to pay for college expenses. Home equity loans are not counted as assets when calculating the EFC.

4. Apply for exceptional circumstances consideration

You may be eligible for exceptional circumstances consideration if you have experienced a significant change in your financial situation, such as a job loss or unexpected medical expenses.

This can result in a lower EFC and increased financial aid eligibility.

To apply for exceptional circumstances consideration, you must contact the financial aid office at your college or university and provide documentation of your circumstances.

5. Increasing Household Size

You can reduce your expected family contribution by increasing the household size.

A household member is considered to live in a home, he or she will receive up to 50% of the support a child gets from their parent for a college education.

As a parent or a student, by increasing the household number and number of children going to college, you can reduce your expected family contribution,

Although you don’t always have complete control over this.

6. Lower the number of assets in the child’s name or keep assets in the parent’s name

Reducing the assets in your child’s name can help reduce expected family contributions. You can start by moving assets from the child’s name to the name of another family member, preferably the parents.

This will help to boost tax savings as the tax bracket for adults is considerably higher than that of a child. You can also lower EFC by having your child start and contribute to their IRA.

7. Contribute to a Roth IRA in the child’s name

Your contributions to a traditional IRA can entitle you to a tax deduction each year.

IRAs are called Independent retirement accounts, and the money you contribute to your IRA is not considered assets for financial aid.

Frequently Asked Questions (FAQs) On How To Lower EFC

What is the lowest possible EFC number?

The lowest EFC number that one can have is zero. On the other hand, 99,999 is the highest EFC number.

What is the average amount of EFC?

The average EFC amount is $10,000.

What is an EFC adjustment?

Suppose your family’s financial position and stance have changed for the better from what the federal income tax return shows. In that case, you are qualified for a financial aid adjustment.

What can I do if my EFC is too high?

If your EFC is very high, you may need to depend on private student loans to handle financial responsibilities that your family cannot handle alone.


Reducing the expected family contribution (EFC) can be challenging, but it is not impossible.

Several strategies can be employed to reduce your EFC, including filing the Free Application for Federal Student Aid (FAFSA) as early as possible, maximizing tax deductions and credits, strategically saving money in tax-advantaged accounts, and considering alternative education funding sources such as grants, scholarships, and work-study programs.

It is important to note that reducing your EFC does not necessarily mean you will receive more financial aid.

Instead, it increases your eligibility for need-based aid, awarded based on your family’s financial situation.

Therefore, it is essential to have a clear understanding of the financial aid process and the criteria used to award aid.

Additionally, seeking the assistance of a financial aid professional or a certified public accountant (CPA) can be beneficial in identifying other possible strategies to reduce your EFC.

It is crucial to start planning early and exploring all possible options to minimize the financial burden of higher education and ensure that it is accessible to all students, regardless of their financial backgrounds.

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