Pell Grant: Expected Family Contribution

Posted by Brendan Flaherty

May 27, 2016 5:41:49 PM

The awarding of a Pell Grant is based on the cost of attending a college, the expected family contribution amount, and whether student attendance is based on a full academic year as a part-time or full-time student.

The Expected Family Contribution (EFC) is a formula used to determine parents’ contributions toward college costs. A general overview of the formula used for dependent students is calculated as follows:

  • Step 1: Determine both the earned and untaxed income, and the benefits of the parents.
  • Step 2: Subtract any allowances against income (e.g. taxes paid, Social Security allowances and an employment expense allowance available for two working parents or a single working parent).
  • Step 3: Determine the parent's contribution from assets, which results in their discretionary net worth x .12
  • Step 4: Add together Step 2 plus Step 3 to get the parents’ adjusted available income (AAI).
  • Step 5: Go to Table A 6 which provides a contribution amount based on the AAI.
  • Step 6: This figure is divided by the number of children presently in college.

The result is the parents’ EFC for the current academic year.

Topics: Course 1: Intro to FP, Education Planning