The Expected Family Contribution--What Do We Really Expect?
By Marvin Smith
As we roll through the summer, colleges are busy providing orientation programs to new students and their parents. Many include financial aid update sessions, which I sense are increasingly attended each year as the cost of college rises and the importance of financial aid increases. Orientation provides a great opportunity to teach families about the process of paying for college, but what should we be teaching them? What do we expect from families?
I just recently learned that a majority of schools do not list a FAFSA-driven Expected Family Contribution (EFC) on an award letter anymore because it is "too confusing" and it leads to "too many questions." In fact, the NASFAA Award Letter Task Force omitted the EFC figure from its recommendations for a model award letter. Even the FASFSA Student Aid Report issued by the Federal Processor hedges on this issue, informing families that "the EFC is not the amount of money that your family must provide" and that families should think of it as aid eligibility index.
Coming from schools that have traditionally listed an EFC on an award letter and regularly deal with the questions, I certainly understand the concern. But simply avoiding the topic of the "mysterious" EFC leads to more parent confusion than necessary. I believe the financial aid community should take back the discussion and help families make sense of the enigmatic "paying for college" system.
Here are a few reasons we need to make families more aware of some expectations:
1. Families need to understand that they are expected to contribute toward college costs to the extent they are able.
How many schools are delivering this simple message at orientation? Regardless of your perspective about whether the EFC accurately reflects a family’s ability to pay, downplaying the EFC (i.e., not listing the EFC on an award letter) only serves to compound the impression that the family does not have a responsibility for higher education costs.
2. The EFC is still relevant.
While the EFC figure is shocking to some families, the EFC does not come out of thin air. If anything, one could argue that the contribution defined by the EFC can be too low, given that some significant financial assets are all but ignored in Federal Methodology need analysis. But many parents still come to orientation believing that they will not have to pay for any college expenses.
3. If parents do not contribute to college costs to the extent they are able, the student is likely to incur more student loan debt then necessary.
Colleges simply do not have enough financial aid to ignore the resources of parents. But who ends up providing for unmet need if the parents do not contribute to the extent they are able? Usually, it is the student who makes up this difference. Many turn to working an outrageous number of hours or borrowing private loans which often carry unfavorable terms and rates. I continue to be shocked when I talk to parents who say "I want to put the entire debt in [my child’s] name," or that they want to "be sure [their child] has some skin in the game." That is fine, to a point. But should parents who have the resources to help really be cosigning on outrageous private loan products to simply make sure that the student "pays for college?"
4. The EFC appears on the ISIR, so it is already likely to confuse families.
If we aren't proactive in explaining what the EFC represents, families may be misled by the mistaken belief that they "have to write a check for the amount of the EFC" and assume that they cannot afford to send their student to college. On the other end of the spectrum, some families with a low EFC may assume the figure represents great news. These families believe they’ll only have to pay X amount of dollars so their child can attend any college in the country regardless of cost. If we don’t explain what an EFC represents to families--as well as have a conversation about unmet need--some students will end up enrolling at our schools who simply cannot afford to attend, and they often will not figure this out until the middle of their freshman year
5. By not explaining expectations to families, we are not working with them in a transparent way.
The EFC drives eligibility for need-based aid, so not only do we need to explain what the EFC is, we also need to explain the full cost of attendance estimate and the rising cost of college, the difference between direct and indirect costs, and the reality of unmet need in aid packages. Quite simply, the financial aid profession needs to do a better job of educating families about the current economic realities of paying for college.
Clearly, the concept of the EFC is difficult to explain in a way that makes sense. This should not dissuade us from at least trying to explain expectations to families. Some parents may feel overwhelmed by the cost of college, the weight of the college choice decision, and the heightened emotions that come with sending a child to college. Other parents may not have even thought about how much they can contribute to college costs. Dismissing or ignoring information about expectations can impede the decision-making ability of families and lead to poor choices. In my view, our profession has a responsibility to educate families about expectations regardless of how difficult those discussions may be.
Marvin Smith started his financial aid career as a graduate student working on a NASFAA Sponsored Research Grant project focused on the parents’ perspective of financial aid at Purdue University in 1988. He is currently director of student financial services at Indiana University - Purdue University Indianapolis (IUPUI).
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