Chapter 3

Expected Family Contribution (EFC)

The EFC is a measure of how much the student and his or her family can be expected to contribute to the cost of the student’s education for the year. The EFC is calculated according to a formula specified in the law. In this chapter we explain the formula in detail.

General Information

All the data the Central Processing System uses to calculate the EFC come from the information students provide on the FAFSA. The EFC formula uses many variables, including income, assets, the number of persons in the household, and the number of those attending college for the award year.

Every year the Department publishes updated tables used in the EFC calculation. The 2020–2021 updates are in the May 31, 2019, Federal Register. Also available at fsapartners.ed.gov/knowledge-center is the EFC Formula Guide.

The law (see HEA Sec. 474–479) gives three regular EFC formulas: one each for dependent students, independent students without dependents other than a spouse, and independent students with dependents other than a spouse (Formulas A, B, and C respectively). There are two variants of the regular EFC calculation: a simplified formula with fewer data elements for each group above, and an automatic zero EFC for Formula A and C students.

Simplified Formula

The simplified formula is basically the same as the regular formula except that asset information isn’t considered in the calculation. A dependent student qualifies for the simplified calculation if

  • the parents’ combined adjusted gross income (AGI, for tax filers) or income earned from work (for non-filers) was less than $50,000, and

  • either (1) the parents did not file Schedule 1 with their IRS Form 1040,1 (2) one of them is a dislocated worker as defined in the Workforce Innovation and Opportunity Act (see Chapter 2 for a description of dislocated worker), or (3) anyone counted in their household size received a means-tested federal benefit during 2018 or 2019.2

An independent student qualifies for the simplified calculation if

  • the student’s and spouse’s combined AGI (tax filers) or income earned from work (non-filers) was less than $50,000, and

  • either: (1) the student and spouse did not file Schedule 1 with their IRS Form 1040,1 (2) one of them is a dislocated worker as defined in the Workforce Innovation and Opportunity Act (see Chapter 2 for a description of dislocated worker), or (3) anyone counted in the household size received a means-tested federal benefit in 2018 or 2019.2

The FAFSA website has a threshold question that allows the asset questions to be skipped when the student seems eligible for the simplified formula or an automatic zero EFC. But in some instances, such as when using a paper FAFSA, a student who qualifies for the simplified formula will provide asset information. In those cases the CPS will calculate two EFCs: one using the assets and one excluding them. The EFC from the simplified formula (which excludes assets) is called the primary EFC and is printed on the front of the student’s SAR, while the EFC from the full calculation is called the secondary EFC and is printed in the FAA Information section. To determine the student’s federal aid, the school must use the primary EFC, which will always be less than or equal to the secondary EFC. If it turns out that the student was not eligible for the simplified formula and did not provide asset information, the school must correct and submit the record and use the EFC reported on the resulting transaction.


1 This includes those who filed a Schedule 1 only to report one or more of the following: a capital gain (but not a loss), unemployment compensation, Alaska Permanent Fund dividends, educator expenses, IRA deductions, or the student loan interest deduction. It also includes those who were not required to file a 1040 return and those who filed a return for one of the following: Puerto Rico, Guam, American Samoa, or the Virgin Islands.

2 The means-tested federal benefit programs are:

  • Medicaid (including the Children’s Health Insurance Program) or Supplemental Security Income (SSI)

  • Supplemental Nutrition Assistance Program (SNAP) benefits, also known as food stamps

  • The Free and Reduced Price School Lunch Program

  • Temporary Assistance for Needy Families (TANF)

  • Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)

A person need not have received the benefit for an entire year; receiving it at any time in the base or following year qualifies. Also, an FAA may use professional judgment (PJ) to count a benefit if a person did not receive it during those 24 months but is receiving it now.

Automatic Zero EFC

The law also provides for an automatic zero EFC for some students. The rules for determining who qualifies for this variant are the same as those for the simplified formula with these differences:

  • The income threshold is $26,000 or less instead of less than $50,000.

  • It (the automatic zero EFC) is not available to independent students without dependents other than a spouse (those who use Formula B).

Skip logic in the online FAFSA will allow these students to answer fewer questions, and if they are selected for verification, fewer items are required.

Department of Defense Match and Iraq and Afghanistan Service Grant

Schools will consider the EFC to be zero for Pell-eligible students with a parent or guardian who was a member of the U.S. Armed Forces and who died as a result of service in Iraq or Afghanistan after September 11, 2001. These students must have been less than 24 years old or enrolled in college when the parent or guardian died.

The CPS will match applications against a file provided by the Department of Defense (DOD). If a match is found, a personalized letter will be sent to the student explaining the potential increase in funding, the DOD match flag will be set to “Y” on the ISIR, and a date will appear in the parent’s date of death field (which, out of sensitivity, will not be noted on the SAR). The CPS will calculate an EFC normally; the school should use a zero EFC when packaging qualifying students.

Students in this situation who are not Pell eligible because their EFC is too high will be able to receive an Iraq and Afghanistan service grant (see Volume 1, Chapter 6). The amount of the grant will be the same as that of the Pell Grant they would have been eligible for with a zero EFC minus a set percentage (see Chapter 3 of Volume 3_ for specific guidance on calculating grant awards). However, for these students the school uses the EFC calculated by the CPS for packaging instead of zero.

Alternate EFCS

The law specifies how the EFC of a dependent student is modified if the student is going to enroll for other than a nine-month period. The EFC found in the upper right corner of the first page of the output document is based on a nine-month enrollment period and should always be used for awarding a Pell Grant, even if the student is attending for a longer or shorter period. The second section of the FAA information area has a table of alternate primary and secondary EFCs for 1–12 months that you must use to award aid (other than Pell grants) if the student is attending for other than nine months.

The EFC Worksheets

The end of the chapter contains the EFC worksheets, which can be used to manually calculate an EFC or to see how the EFC is determined for each of the formulas. For items taken from the FAFSA, the worksheets indicate the corresponding FAFSA/SAR line numbers. On the worksheets for the simplified formula, the parts of the calculation that aren’t used are grayed out.

Negative AGI or zero?

The FAFSA asks for the AGI, which can be a negative number and which appears on the tax return. If you are doing a hand calculation of the EFC, you’ll notice that the first line of the worksheet for Formula A cites the FAFSA line number and instructs you to substitute a zero if the AGI is negative. This does not mean that the student or parent should report a negative AGI as a zero on the FAFSA. The CPS will change the value to zero, and it makes assumptions that you will not make when completing an EFC worksheet by hand. When filling out the FAFSA, the applicant should use the AGI as it appears on the tax return, even if it is a negative number.

Formula A-Dependent Students

The EFC for a dependent student is calculated using the FAFSA data for the student and his parents. The CPS calculates the parents’ contribution (which includes their assets), the student’s contribution from income, and the student’s contribution from assets; the EFC is the sum of these three.

Under the simplified formula, the parents’ contribution doesn’t include assets, nor is the student’s contribution from assets counted.

Parents’ contribution

The parents’ available income and contribution from assets are first determined, and then these are used with the number in college to calculate the parents’ contribution.

Parents’ available income. The parents’ available income is calculated by subtracting certain allowances from the parents’ total income. These allowances account for certain nondiscretionary expenses, such as taxes and basic living expenses. Once a minimum level of support has been offset for those expenses, the formula assumes that the remaining income is available for discretionary purposes, including paying for a postsecondary education. The available income can be a negative number.

The total income is the sum of the taxable and untaxed income, minus amounts reported in the income but excluded from the formula. If the parents are tax filers, the parents’ AGI as reported on the FAFSA is the amount of the parents’ taxable income used in the calculation. If the parents are not tax filers, the calculation uses the parents’ reported income earned from work. Total income can be a negative number.

The sum of the following allowances reduces the parents’ total income:

  • U.S. income tax paid. Use the amount reported on the FAFSA. Non-tax filers don’t receive this allowance. If this is a negative amount, it is set to zero.

  • State and other tax allowance. Use Table A1. This allowance is a percentage of parents’ total income and approximates the average amount paid in state and other taxes. The percentage varies according to the state and according to whether the parents’ total income is below $15,000 or is $15,000 or more. The state used is the parents’ state of legal residence reported on the FAFSA. If this item is blank or invalid, the student’s reported state of legal residence is used. If both are blank or invalid, the state in the student’s mailing address is used. If all three are blank or invalid, the rate shown in Table A1 for a blank or invalid state is used (3% for total income below $15,000; 2% for total income of $15,000 or more). If the allowance is a negative amount, it’s set to zero.

  • Parents’ Social Security tax allowance. The parents’ Social Security taxes are calculated separately by applying the rates shown in Table A2 to both parents’ income earned from work in 2018 (as reported on the FAFSA). The total allowance for Social Security taxes is never less than zero.

  • Income protection allowance. Use Table A3. This allowance is for the basic living expenses of a family. It varies according to the number in the parents’ household and the number in college in 2020–2021, as reported on the FAFSA. In general, a school can assume that 30% of the income protection allowance amount is for food, 22% for housing, 9% for transportation expenses, 16% for clothing and personal care, 11% for medical care, and 12% for other family consumption. The income protection allowance used for a particular student is provided as one of the intermediate values in the FAA Information Section of the output document (labeled as “IPA”).

  • Employment expense allowance. Families with two working parents and one-parent families have extra expenses that must be considered, such as housekeeping services, transportation, clothing and upkeep, and meals away from home. This allowance recognizes those extra expenses. For two working parents, the allowance is 35% of the lesser of the first or second parent’s income earned from work (questions 86 and 87), but may not exceed $4,000. For one-parent families, the allowance is 35% of the parent’s income earned from work, also not to exceed $4,000. If a student’s parents are married and only one parent reports an income earned from work, the allowance is zero. The employment expense allowance is never less than zero.

Parents’ contribution from assets. The full formula uses the assets of parents of a dependent student and determines a “contribution from assets.” This amount is combined with available income to give an accurate picture of the family’s financial strength. In the simplified formula assets aren’t counted.

First, the parents’ net worth is calculated by adding assets reported on the FAFSA. The net worth of a business or a farm is adjusted to protect a portion of these assets. Use Table A4 to calculate the amount to be used.

Second, the parents’ discretionary net worth is calculated by subtracting the education savings and asset protection allowance (Table A5) from the parents’ net worth. As with income, this is done to protect a portion of assets. The allowances for ages 40 through 65 approximate the present cost of an annuity that, when combined with Social Security benefits, would provide a moderate level of living for a retired couple or single person at age 65. As shown in Table A5, the allowance increases with the age of the older parent (as reported on the FAFSA) to indicate the cost of purchasing such an annuity at a given age. Discretionary net worth may be less than zero.

Finally, the discretionary net worth is multiplied by the conversion rate of 12% to get the parents’ contribution from assets, which represents the portion of parental assets considered available to help pay for the student’s college education. If the contribution from assets is negative, it is set to zero.

Calculation of parents’ contribution. This is the final step in determining the parents’ contribution. The parents’ available income and contribution from assets are added together to determine the parents’ adjusted available income, which can be a negative number. The total parents’ contribution from adjusted available income is calculated from the amounts and rates in Table A6 and is the total amount parents are expected to contribute toward all of their family’s postsecondary educational costs. The rates in Table A6 increase from 22% to 47% as the adjusted available income increases. This is based on the principle that as income increases beyond the amount needed to maintain a basic standard of living, the portion used for family maintenance decreases and the portion available for discretionary purposes increases. Therefore, a progressively larger amount of income may be contributed toward postsecondary educational costs.

The parents’ contribution for the individual student is calculated by dividing the total parents’ contribution from adjusted available income by the number in college in 2020–2021, as reported on the FAFSA. Parents are not included in the number attending college.

Student’s contribution from income

To determine the student’s contribution from income, the student’s available income (AI) is first calculated by subtracting total allowances from the student’s total income. The AI is then assessed at a rate of 50% to obtain the student contribution from available income. If the student contribution from available income is less than zero, it’s set to zero.

As with the parents’ income information, the student’s total income is calculated using information from his FAFSA. His total income is the sum of his taxable and untaxed income, minus amounts reported in the income but excluded from the formula (see Chapter 2 for more on these exclusions). If the student is a tax filer, his AGI as reported on the FAFSA is the amount of taxable income used in the calculation. If he is not a tax filer, the calculation uses his reported income earned from work. The total income may be a negative number.

The allowances are calculated by adding the following:

  • U.S. income tax paid. Use the amount reported on the FAFSA. Non-tax filers don’t receive this allowance. If this is a negative amount, it’s set to zero.

  • State and other tax allowance. Use Table A7. This allowance is a percentage of the student’s total income that varies according to the state. The state to be used is the student’s state of legal residence reported on the FAFSA. If that item is blank or invalid, the state in the student’s mailing address is used. If both items are blank or invalid, the parents’ state of legal residence is used. If all three items are blank or invalid, the rate for a blank or invalid state in Table A7 is used (2%). If the allowance is a negative amount, it’s set to zero.

  • Social Security tax allowance. The student’s Social Security taxes are calculated by applying the rates shown in Table A2 to the student’s income earned from work in 2018 (as reported on the FAFSA). The total allowance for Social Security taxes is never less than zero.

  • Income protection allowance. The income protection allowance for a dependent student is $6,840.

  • Parent’s negative AAI. To recognize that a student’s income may be needed to help support the family, the EFC calculation allows a parent’s negative adjusted available income (AAI) to reduce a dependent student’s contribution from income. Because the student’s contribution from income cannot be negative, this will not affect the student’s contribution from assets.

Student’s contribution from assets

The student’s assets are treated the same way as the parents’ assets with three differences: there is no adjustment to the net worth of a business or farm, there is no education savings and asset protection allowance, and net worth is assessed at the rate of 20%. Remember that under the simplified formula there is no student contribution from assets.

The student’s net worth is calculated by adding assets reported on the FAFSA (negative amounts are converted to zero for this calculation). The net worth is multiplied by 20% to obtain the student’s contribution from assets, which is the portion of assets considered available to help pay for his postsecondary education.

Calculation of student’s EFC

The student’s EFC is determined by adding the parents’ contribution, the student’s contribution from available income, and his contribution from assets. If the student qualified for the simplified formula, his contribution from assets is not counted, and the parents’ contribution is determined without using their assets.

Alternate EFCs for other than nine-month enrollment

The standard parents’ contribution is for a nine-month enrollment period. For a shorter period, the parents’ contribution is prorated according to the number of months of enrollment. The student’s contribution from available income is also prorated and then added to the student asset contribution, which is not prorated. For an enrollment of more than nine months, the parents’ contribution is calculated by adjusting the standard nine-month formula on page 3 of Worksheet A of the EFC worksheets, and the student’s contribution remains at the nine-month amount.

Formula B—Independent Student Without Dependents Other Than A Spouse

The EFC for an independent student without dependents other than a spouse is calculated using FAFSA data for the student and spouse. The CPS calculates a contribution from available income and a contribution from assets. The sum of these two is divided by the number in college in 2020–2021, as reported on the FAFSA. The result is the EFC for the 2020–2021 award year. Under the simplified formula, the contribution from assets isn’t used.

Contribution from available income

The student’s available income, which can be a negative number, is calculated by subtracting the total allowances from the total income. These allowances account for certain nondiscretionary expenses, such as taxes and basic living expenses. Once a minimum level of support has been provided to meet those expenses, the formula assumes that the remaining income is available for discretionary purposes, including paying for a postsecondary education. The available income is then assessed at a rate of 50% to obtain the student’s contribution from available income.

Total income. The total income is the sum of the student’s and her spouse’s (if the student is married) taxable and untaxed income, minus amounts reported in the income on the FAFSA but excluded from the formula (see Chapter 2 for more on these exclusions). If the student and spouse are tax filers, their AGI as reported on the FAFSA is the amount of taxable income used in the calculation. If they are not tax filers, the calculation uses reported income earned from work. Untaxed income is included in the formula because it may have a considerable effect on the family’s financial strength and, in some cases, may be the family’s main source of income. The total income can be a negative number.

Allowances against income. Total allowances are calculated by adding the following:

  • U.S. income tax paid. Use the amount reported on the FAFSA. Non-tax filers don’t receive this allowance. If this is a negative amount, it’s set to zero.

  • State and other tax allowance. Use Table B1. This allowance is a percentage of the student and spouse’s total income. The percentage varies according to the state. The state to be used is the student’s state of legal residence reported on the FAFSA. If that item is blank or invalid, the state in the student’s mailing address is used. If both items are blank or invalid, the rate for a blank or invalid state is used (2%). If the allowance is a negative amount, it’s set to zero.

  • Social Security tax allowance. The student and spouse’s Social Security taxes are calculated separately by applying the tax rates shown in Table B2 to the student’s and spouse’s income earned from work in 2018 (as reported on the FAFSA). The total allowance for Social Security taxes is never less than zero.

  • Income protection allowance. The income protection allowance is $10,640 for single students and for married students whose spouse is enrolled at least half time. The allowance is $17,060 for married students whose spouse isn’t enrolled at least half time.

  • Employment expense allowance. Families with two working spouses have extra expenses that must be considered, such as housekeeping services, transportation, clothing and upkeep, and meals away from home. This allowance recognizes those extra expenses. If the student isn’t married, the employment expense allowance is zero. If the student is married but only one person is working (either the student or the student’s spouse), the allowance is zero. If both the student and his spouse are working, the allowance is 35% of the lesser of the student’s income earned from work (Question 39) or the spouse’s income earned from work (Question 40), but it may not exceed $4,000.

Contribution from assets

For students who qualify for the simplified formula, there is no contribution from assets. In the full formula, the assets of an independent student with no dependents other than a spouse are considered in order to fully measure the family’s ability to contribute toward postsecondary educational costs.

First, the net worth of the student and spouse’s assets is calculated by adding assets reported on the FAFSA. The net worth of a business or a farm is adjusted to protect a portion of the net worth of these assets. Use Table B3 to calculate the amount to be used.

Second, the student and spouse’s discretionary net worth is calculated by subtracting the asset protection allowance (Table B4) from the net worth. The allowance increases with the age of the student as of December 31, 2019, which may be determined from the student’s date of birth as reported on the FAFSA. This is done to protect a portion of assets that may be needed for purposes other than education, such as emergencies or retirement. Discretionary net worth can be less than zero.

Finally, the discretionary net worth is multiplied by the conversion rate of 20% to obtain the student and spouse’s contribution from assets, which represents the portion of the value of the assets that is considered available to help pay for the student’s college education. If the contribution from assets is less than zero, it’s set to zero.

Calculation of student’s EFC

The student’s EFC is determined by adding the student and spouse’s contribution from available income to their contribution from assets and then dividing the sum by the number in college. If the student qualified for the simplified formula, the contribution from assets is excluded from the calculation of the EFC.

Alternate EFCs for other than nine-month enrollment

The standard EFC is for a nine-month enrollment period. If the student will be enrolled for less than nine months, the EFC is simply prorated by dividing it by nine and then multiplying the result by the number of months the student will be enrolled. For an enrollment of more than nine months, however, the EFC remains at the nine-month amount.

Formula C—Independent Student With Dependents Other Than A Spouse

The EFC for an independent student with dependents other than a spouse is calculated using the information for the student and spouse provided on the FAFSA. The formula is almost the same as the formula for the parents of a dependent student. There are three basic steps. First, the student’s available income is determined. Then, the student’s contribution from assets is calculated. Finally, the EFC is calculated using the available income, the contribution from assets, and the number in college.

Available income

Available income is calculated by subtracting allowances from the student’s total income. These allowances account for certain nondiscretionary costs, such as taxes and basic living expenses, and represent a minimum level of support. The formula assumes that the remaining income is available for discretionary purposes, including paying for a postsecondary education. The available income can be a negative number.

Student’s total income. The student’s total income is the sum of the student’s and his spouse’s (if the student is married) taxable and untaxed income, minus amounts reported in the income on the FAFSA but excluded from the formula (see Chapter 2 for more information on these exclusions). If the student and spouse are tax filers, AGI as reported on the FAFSA is the amount of taxable income used in the calculation. If they are not tax filers, the calculation uses reported income earned from work. The total income can be a negative number.

Allowances against income. Total allowances are calculated by adding the following:

  • U.S. income tax paid. Use the amount reported on the FAFSA. Non-tax filers don’t receive this allowance. If this is a negative amount, it is set to zero.

  • State and other tax allowance. Use Table C1. This allowance is a percentage of the total income and approximates the average amount paid in state and other taxes. The percentage varies according to the state and according to whether the total income is below $15,000 or is $15,000 or more. The state to be used is the student’s state of legal residence reported on the FAFSA. If this item is blank or invalid, the state in the student’s mailing address is used. If both items are blank or invalid, the rate for a blank or invalid state is used (3% for total income below $15,000; 2% for total income of $15,000 or more). If the allowance is a negative amount, it’s set to zero.

  • Social Security tax allowance. The student’s and spouse’s Social Security taxes are calculated separately by applying the tax rates shown in Table C2 to the student’s income earned from work and the spouse’s income earned from work in 2018 (as reported on the FAFSA). The total allowance for Social Security taxes is never less than zero.

  • Income protection allowance. Use Table C3. This allowance provides for the basic living expenses of a family. It varies according to the number in the student’s household and the number in college in 2020–2021, as reported on the FAFSA. In general, a school can assume that 30% of the income protection allowance is for food, 22% for housing, 9% for transportation expenses, 16% for clothing and personal care, 11% for medical care, and 12% for other family consumption. The income protection allowance used for a particular student is provided as one of the intermediate values in the FAA Information Section of the output document (labeled as “IPA”).

  • Employment expense allowance. Families with two working parents and one-parent families have extra expenses that must be considered, such as housekeeping services, transportation, clothing and upkeep, and meals away from home. This allowance recognizes those extra expenses. When both the student and spouse work, the allowance is 35% of the lesser of the student’s income earned from work (Question 39) or the spouse’s income earned from work (Question 40), but may not exceed $4,000. If the student isn’t married, the allowance is 35% of the student’s income earned from work, or $4,000, whichever is less. If a student is married and only the student or the spouse (but not both) reports an income earned from work, the allowance is zero. The employment expense allowance is never less than zero.

Contribution from assets

In the full formula, the assets of an independent student with dependents other than a spouse are considered in order to fully measure the family’s ability to contribute toward postsecondary educational costs. The formula determines a “contribution from assets,” an amount that is combined with available income to give an accurate picture of the family’s financial strength. In the simplified formula, the assets aren’t counted at all.

First, the net worth of a student and spouse’s assets is calculated by adding assets reported on the FAFSA. The net worth of a business or farm is adjusted to protect a portion of these assets. Use Table C4 to calculate the amount to be used.

Second, the student and spouse’s discretionary net worth is calculated by subtracting the asset protection allowance (Table C5) from the net worth. The allowance increases with the age of the student as of December 31, 2020, which may be determined from the student’s date of birth as reported on the FAFSA. This is done to protect a portion of assets that may be needed for purposes other than education, such as emergencies or retirement. Discretionary net worth can be less than zero.

Finally, the discretionary net worth is multiplied by 7% to obtain the contribution from assets, which is the portion of the value of the student’s and spouse’s assets considered to be available to help pay for the student’s postsecondary education. If the contribution from assets is less than zero, it is set to zero.

Calculation of student’s EFC

This is the final step in determining the EFC for the independent student with dependents other than a spouse. The available income and the contribution from assets are added together to obtain the adjusted available income. The adjusted available income can be a negative number. The total contribution from adjusted available income is calculated from using Table C6. This is the total amount the student’s family is expected to contribute toward family postsecondary educational costs. The rates in Table C6 increase from 22% to 47% as the adjusted available income increases. The rate is based on the principle that as income increases beyond the amount needed to maintain a basic standard of living, the portion used for family maintenance decreases, while the portion available for discretionary purposes increases. The larger the income, the easier it is for a family to contribute toward postsecondary educational costs with less effect on the maintenance of the family.

Dividing the total student’s contribution from adjusted available income by the number in college, as reported on the FAFSA, yields the EFC for the 2020–2021 award year.

Alternate EFCs for other than nine-month enrollment

The standard EFC is for a nine-month enrollment period. If the student will be enrolled for less than nine months, the EFC is simply prorated by dividing it by nine and then multiplying the result by the number of months the student will be enrolled. For an enrollment of more than nine months, however, the EFC remains at the nine-month amount.

Below is a list of 2020-2021 EFC Formula worksheets:

Published: 03/28/2021