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 a given award year. It impacts a student’s eligibility for certain types of federal student aid. The EFC is calculated according to a formula specified in the law and explained in detail in this chapter.
General Information
The Central Processing System (CPS) uses data provided by the applicant on the FAFSA form to calculate the EFC. The EFC formula uses income, assets, the number of persons in the household, and the number of those attending college for the award year.
Tables used in the computation of the EFC is updated annually and published on the Knowledge Center in a Federal Register. Also updated each year is the Department’s EFC Formula Guide which is available at fsapartners.ed.gov/knowledgecenter in the Library section under Resource Type > Handbooks, Manuals, or Guides > 20232024 Expected Family Contribution (EFC) Formula Guide.
The law (see HEA Sec. 474–479) gives three regular EFC formulas:

Formula A – Dependent students,

Formula B – Independent students without dependents other than a spouse, and

Formula C – Independent students with dependents other than a spouse
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 both (1) and (2) below are true:

The student’s parents did not file Schedule 1 with their IRS Form 1040
OR
The student’s parent is a dislocated worker, as defined in the Workforce Innovation and Opportunity Act (see Chapter 2 for a description of dislocated worker)
OR
Anyone counted in parents’ household size (as defined on the FAFSA form and in Chapter 2) received a meanstested federal benefit during 2021 or 2022.
AND

The parents’ combined 2021 adjusted gross income (AGI, for tax filers) or income earned from work (for nonfilers) was less than $50,000.
An independent student qualifies for the simplified calculation if (1) and (2) below are true:

The student and spouse did not file Schedule 1 with their IRS Form 1040
OR
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
Anyone counted in the household size (as defined on the FAFSA form and in Chapter 2) received a meanstested federal benefit in 2021 or 2022.
AND

The student’s and spouse’s combined 2021 AGI (tax filers) or income earned from work (nonfilers) was less than $50,000.
Schedule 1 Filing Exceptions
Individuals who filed a Schedule 1 only to report one unemployment compensation, educator expenses, IRA deductions, student loan interest deduction or Alaska Permanent Fund dividends should be considered individuals who did not file Schedule 1 for purposes of qualifying for the simplified need formula.
Individuals who were not required to file a 1040 return and those who filed a return for Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, or Palau should be considered individuals who did not file Schedule 1 for purposes of qualifying for the simplified need formula.
MeansTested Federal Benefits Programs
The meanstested 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 ReducedPrice School Lunch Program

Temporary Assistance for Needy Families (TANF) – may use a different name in different states

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.
The FAFSA website has a threshold question that allows the applicant to skip asset questions when the applicant seems eligible for the simplified formula or an automatic zero EFC. But in some instances, such as when using a paper FAFSA form, 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.
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 $29,000 or less instead of less than $50,000.

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 form will allow these students to answer fewer questions, and if they are selected for verification, fewer items are required.
Automatic Zero EFC
HEA Sec. 479(c)
Alternate EFCs
The EFC found in the upper right corner of the first page of the output document is based on a ninemonth 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 law specifies how the EFC of a dependent student is modified if the student enrolls for a period other than a nine months. 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) to students attending for other than nine months.
The EFC Worksheets
To further assist schools with the EFC calculation process, the 20232024 EFC Formula Guide contains EFC worksheets and tables for each formula (A, B and C), 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 form, 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.
The following information provides additional insight into the EFC calculation process and may prove helpful when reviewing the EFC worksheets in the EFC Formula Guide.
Negative AGI or zero?
The FAFSA form asks for the AGI (that appears on the tax return), which can be a negative number. 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 form. 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 form, 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 or her 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 form 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 form. Nontax filers don’t receive this allowance. If this is a negative amount, it is set to zero.

State and other tax allowance. Use Table 1: State and Other Tax Allowance in the 20232024 EFC Formula Guide. 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 form. 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 "Other" rate shown in Table 1 for a blank or invalid state is used (2% for total income below $15,000; 1% 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. Use Table 3: Social Security Tax in the 20232024 EFC Formula Guide. Apply the rates shown in the table separately to each parent’s income earned from work in 2021 (as reported on the FAFSA form). The total allowance for Social Security taxes is never less than zero.

Income protection allowance. Use Table 4: Parents’ Income Protection Allowance in the 20232024 EFC Formula Guide. 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 20232024, as reported on the FAFSA form. 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 oneparent 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 83 and 84) but may not exceed $4,700. For oneparent families, the allowance is 35% of the parent’s income earned from work, also not to exceed $4,700. 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 form. The net worth of a business or a farm is adjusted to protect a portion of these assets. Use Table 6: Business/Farm Net Worth Adjustment in the 20232024 EFC Formula Guide 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 7: Education Savings and Asset Protection Allowance in the 20232024 EFC Formula Guide) from the parents’ net worth. 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 8: Contribution from AAI in the 20232024 EFC Formula Guide and is the total amount parents are expected to contribute toward all of their family’s postsecondary educational costs. The rates in Table 8 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. If the total parents’ contribution from adjusted available income is negative, it is set to zero.
The parents’ contribution for the individual student is then calculated by dividing the total parents’ contribution from adjusted available income by the number in college in 20232024, as reported on the FAFSA form. 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 or her FAFSA form. The student’s total income is the sum of their 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 or her AGI as reported on the FAFSA form is the amount of taxable income used in the calculation. If the student is not a tax filer, the calculation uses his or her 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 form. Nontax filers don’t receive this allowance. If this is a negative amount, it’s set to zero.

State and other tax allowance. Use Table 2: State and Other Tax Allowance in the 20232024 EFC Formula Guide. 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 form. 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 “Other” rate for a blank or invalid state in Table 2 is used (1%). If the allowance is a negative amount, it’s set to zero.

Social Security tax allowance. Use Table 3: Social Security Tax in the 20232024 EFC Formula Guide. The student’s Social Security taxes are calculated by applying the rates to the student’s income earned from work in 2021 (as reported on the FAFSA form). The total allowance for Social Security taxes is never less than zero.

Income protection allowance. The income protection allowance for a dependent student is $7,600.

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.

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 form (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 or her 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 or her contribution from assets. If the student qualified for the simplified formula, his or her contribution from assets is not counted, and the parents’ contribution is determined without using their assets.
Alternate EFCs for other than ninemonth enrollment
The standard parents’ contribution is for a ninemonth 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 other than nine months, the parents’ contribution is calculated by adjusting the standard ninemonth formula on page 3 of Worksheet A of the EFC worksheets in the 20232024 EFC Formula Guide, and the student’s contribution remains at the ninemonth 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 20232024, as reported on the FAFSA form. The result is the EFC for the 20232024 award year. Under the simplified formula, the contribution from assets is not 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 their spouse’s (if the student is married) taxable and untaxed income, minus amounts reported in the income on the FAFSA form 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 form 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:

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

State and other tax allowance. Use Table 2: State and Other Tax Allowance in the 20232024 EFC Formula Guide. 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 form. 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 “Other” rate for a blank or invalid state is used (1%). If the allowance is a negative amount, it’s set to zero.

Social Security tax allowance. Use Table 3: Social Security Tax in the 20232024 EFC Formula Guide. Apply the rates shown in the table separately to the student’s and spouse’s income earned from work in 2021 (as reported on the FAFSA form). The total allowance for Social Security taxes is never less than zero.

Income protection allowance. The income protection allowance is $11,820 for single students and for married students whose spouse is enrolled at least half time. The allowance is $18,960 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 or is separated, 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 or her spouse are working, the allowance is 35% of the lesser of the student’s income earned from work (Question 35) or the spouse’s income earned from work (Question 36), but it may not exceed $4,700.
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 form. The net worth of a business or a farm is adjusted to protect a portion of the net worth of these assets. Use Table 6: Business/Farm Net Worth Adjustment in the 20232024 EFC Formula Guide 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 7: Education Savings and Asset Protection Allowance in the 20232024 EFC Formula Guide) from the net worth. 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 in 20232024, as reported on the FAFSA form. 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 ninemonth enrollment
The standard EFC is for a ninemonth 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, the EFC remains at the ninemonth 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 form. The formula is like the formula for the parents of a dependent student. There are three basic steps.

Determine the student’s available income.

Calculate the student’s contribution from assets.

Calculate the EFC by adding the available income to the contribution from assets, then dividing by 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 their spouse’s (if the student is married) taxable and untaxed income, minus amounts reported in the income on the FAFSA form 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 form 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:

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

State and other tax allowance. Use Table 1: State and Other Tax Allowance in the 20232024 EFC Formula Guide. 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 form. 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 "Other" rate for a blank or invalid state is used (2% for total income below $15,000; 1% for total income of $15,000 or more). If the allowance is a negative amount, it’s set to zero.

Social Security tax allowance. Use Table 3: Social Security Tax in the 20232024 EFC Formula Guide. Apply the rates shown in the table separately to the student’s and spouse’s income earned from work in 2021 (as reported on the FAFSA form). The total allowance for Social Security taxes is never less than zero.

Income protection allowance. Use Table 5: Student and Spouse Income Protection Allowance in the 20232024 EFC Formula Guide. 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 20232024, as reported on the FAFSA form. 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 oneparent families have extra expenses that must be considered, such as housekeeping services, transportation, clothing 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 35) or the spouse’s income earned from work (Question 36), but may not exceed $4,700. If the student isn’t married, the allowance is 35% of the student’s income earned from work, or $4,700, 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 are not counted at all.
First, the net worth of a student and spouse’s assets is calculated by adding assets reported on the FAFSA form. The net worth of a business or farm is adjusted to protect a portion of these assets. Use Table 6: Business/Farm Net Worth Adjustment in the 20232024 EFC Formula Guide 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 7: Education Savings and Asset Protection Allowance in the 20232024 EFC Formula Guide) from the net worth. 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 8: Contribution from AAI in the 20232024 EFC Formula Guide. This is the total amount the student’s family is expected to contribute toward family postsecondary educational costs. The rates in Table 8 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. If the total contribution from adjusted available income is negative, it is set to zero.
Dividing the total student’s contribution from adjusted available income by the number in college, as reported on the FAFSA form, yields the EFC for the 20232024 award year.
Alternate EFCs for other than ninemonth enrollment
The standard EFC is for a ninemonth 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, the EFC remains at the ninemonth amount.