Once you complete and submit the Free Application for Federal Student Aid, also known as the FAFSA, your application is evaluated based on several criteria to determine your eligibility for financial aid. However, one element is very important in determining the amount of your aid. The Expected Family Contribution criterion is applied to determine your eligibility for need-based federal and school-based funding, as well as the amount of funding you and your family are expected to provide in addition to the aid. (Source: Federal Student Aid Office)
Dependent vs Independent Student Status
The FAFSA determines the student’s status as dependent or independent, and each year, the criterion changes. For example, the 2015-2016 FAFSA includes the question, “Were You Born Before January 1, 1992?” On the 2016-2017 FAFSA, the birth year will be changed to 1993. If you were born before the date specified in the FAFSA, you are considered to be an independent student. Emancipated minors, homeless students and students living in foster care are considered to be independent, as well.
Other criteria for determining a student’s dependency status include whether the student is married, enrolled in a Master’s or PhD program, a military veteran or serving in active duty military or has dependent children living with them.
The EFC Formulas
According to the Federal Student Aid office, the powers that be use three different formulas to determine students’ financial aid eligibility and the Expected Family Contribution. Formula A determines eligibility and aid amounts for dependent students. Formula B determines eligibility and funding amounts for independent students without dependents other than their spouse, and Formula C determines amounts and eligibility for independent students with dependents other than their spouse.
Formula A considers the student’s parents’ adjusted gross income, taxable income and non-taxable income. The formula provides for allowances that are subtracted from the parents’ incomes to lower the expected contributions for families with incomes below $50,000 per year. For families with lower income levels, the EFC can conceivably be zero. Formulas B and C calculate the EFC based only on the income of the student and spouse, if married. The parents’ income is not considered when calculating aid for independent students. In most cases, both dependent and independents students will be required to provide some monetary contribution to accompany their need-based aid.
You can complete the EFC worksheets that accompany the FAFSA to determine an estimate of the EFC for your aid package. However, the EFC amount is not “written in stone” until you receive the Student Aid Report, also known as the SAR, announcing the findings of the financial aid office. If you believe you are a dependent student, use Worksheet A to estimate your EFC. This worksheet uses Formula A to determine your family’s estimated contribution. If you are an independent student with no children living with you, complete the Worksheet B, which uses Formula B to calculate your EFC. Use Worksheet C to implement Formula C if you are an independent student with dependent children living with you at least half of the time.
The amount calculated using the FAFSA worksheets may differ from the award granted on the SAR. If the federal student aid office finds inconsistencies in the student’s reported data, they may take steps to resolve the inconsistencies, which can change the amount of the expected award. This is why you can only estimate your EFC, but until you receive the SAR, the amounts are not documented with the aid office.