How much money can you expect to receive for college? This question is quite possibly one of the most important questions a future college student and their families have. Getting a rough estimate of the amount of financial aid that you will need to pay for your education is crucial in preparing yourself for the financial aid process itself.
When preparing for the FAFSA, remember that you do not necessarily have to wait the designated amount of time for it to be reviewed and sent back to you with the amount of financial aid you qualify for, as well as how much you will have be expected to contribute. On the FAFSA, the Expected Family Contribution (EFC) is a huge indicator of how much you will be expected to contribute towards the overall cost of your education. This number can sometimes end up being much higher than you originally anticipated, resulting in many shocked applicants. To avoid being slapped in the face with a staggering sum, be prepared and know what to expect.
Countless financial aid websites, including the FAFSA site itself, offer Expected Family Contribution calculators that allow you to get a base amount for what you will be expected to pay for college based on your FAFSA results. Since the FASFA’s formula for calculating your EFC is somewhat lengthy, it may be more to your advantage to visit financial aid websites that break it down to a much simpler application. These calculators will have you answer questions pertaining to your personal financial information, such as the gross incomes of the student and the parents, as well as the number of people in the family, and the schools that the student is interested in attending. Based on this kind of information, the EFC calculators will provide you with a good estimate of how much you will be expected to contribute, which in turn tells you how much additional financial assistance you will need.
It is important not to overlook this part of the financial aid process, as you do not want to get hit with a large amount that you did not expect. Oftentimes, people anticipate the number to be much lower than it actually is. Knowing a base amount ahead of time can even help you lower the number by changing various aspects within your personal finances. A financial aid consultant or accountant can help you reduce your family’s adjusted gross income, which plays a big role in determining how much financial aid you qualify for. Liquid assets also weigh heavily on the EFC, so minimizing these assets by doing things such as shifting these assets or paying off larger debts prior to filling out the FAFSA can severely decrease the amount, thus increasing the amount of financial aid for which you are eligible.
While it may be near impossible to figure out on your own exactly what college will cost and exactly how much aid you will receive. Here are a few things to consider when trying to calculate your financial aid:
- When trying to project the cost of college, remember that college cost increase at a rate about twice the inflation rate. Meaning, the college increases an average of 5% to 8% a year.
- If possible, parents should try to save 1/3 to half the projected cost of college. If possible, start at birth but always remember it is not too late to start saving.
- If a parent were to contribute $25.12 a week for 17 years in an account earning 5% interest, at the end of 17 years they would reach $35,000.
Expected Family Contribution (EFC)
- In order to calculate your EFC, estimate how much your family will be expected to contribute and research your financial aid eligibility.
- Understanding your EFC is important in understanding what it will really cost you to attend college.
- Once you know your EFC, simply subtract it from the college’s total cost of attendance. This will be your “financial need”.
Go Financial Aid offers a FREE Financial Aid Calculator to estimate your Expected Family Contribution.
When thinking about education loans remember:
- Federal Stafford Loans have fixed interest rate of 6.8%.
- Federal PLUS loans have a fixed rate of 8.5%.
- Perkins loans have a fixed interest rate of 5%.
- Some educational loans also require a minimum monthly payment. The more money you put on your loans, you will not only pay your loans off faster but save money in interest.
If you have any questions about calculating financial aid, please remember that financial aid consultants are available to help you.