expected-family-contributionExpected family contribution is one of the many variables of the complicated financial aid eligibility equation for collegiate students. In the course of planning to enter a college, university, or vocational school program or during completion of a program, post-secondary students are increasingly likely to consider applying for financial aid. Understanding the factors used to determine what financial aid and how much will be distributed is helpful during this planning.

Financing a Collegiate Education

The cost of attending a post-secondary institution to complete an undergraduate or a graduate degree continues to increase, and more and more students are considering financial aid to assist them in affording college. College students have many expenses, and many of those expenses related to school are factored into the cost of attendance to begin determining financial aid.

The cost of attendance includes tuition, related fees, room and board for on-campus students or average living expenses for off-campus students, books, essential supplies, and additional possible expenses to enable a student to take classes, such as those related to a disability or child care.

Formula for Expected Family Contribution

To begin the financial aid process, students complete the Federal Application for Federal Student Aid. The information provided by a student, and his or her parents if applicable, helps determine the amount of financial contribution an individual or family can offer to cover the cost of attendance. This is calculated as the expected family contribution amount.

The expected family contribution is calculated from several sources of income: both taxed and untaxed direct income, such as those from a job, assets such as homes and property or savings/stocks; and benefit income such as unemployment or state assistance. The expected family contribution is then used to determine financial aid eligibility.

Determining Financial Aid Eligibility

With the expected family contribution and the cost of attendance, financial aid representatives of educational institutions are able to determine the amount and type of assistance that might be available to students. Post-secondary schools determine this first with a need-based calculation and then a non-need calculation.

Need-based financial aid awards are calculated by subtracting the expected family contribution from the cost of attendance. Non-need awards are calculated by subtracting the amount of need-based financial aid awards from the cost of attendance.

Types of Federal Loan Programs

The different types of financial aid are typically categorized into subsidized and grants in one section and unsubsidized loans in the other. Many need-based financial aid awards come from the subsidized and grant category, including Pell Grants, Federal Supplemental Educational Opportunity Grants, and Direct Subsidized Federal Loans. With these loans, interest does not accumulate while a student is in school. In contrast, Direct Unsubsidized Federal Loans do accumulate interest, and these loans are often a part of the non-need category. Federal PLUS Loans are another example of interest-building financial aid loans available.

The completion of the FAFSA is the first step in the process. The expected family contribution is an important determinant of this process for deciding what type of loan is granted and how much aid is distributed to an individual student.

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