Study Suggests Limited Resources Should Go First To Students With Auto-Zero EFCs

By Katy Hopkins, Communications Staff 

There are three ways to obtain an estimated family contribution (EFC) of zero – and while each produces the same result, the inputs can differ significantly. 

That’s one conclusion from a new report by NASFAA Journal of Student Financial Aid author Robert Kelchen, whose analysis included data from nine NASFAA member institutions and gauged financial need and Pell Grant volatility among students with zero EFCs.

It’s a particularly timely issue, as the percentage of students who receive a zero EFC has increased from 18 percent in the 1990s to almost 38 percent in 2011-12, according to Kelchen.

Kelchen sampled 152,874 students – 68 percent of whom were dependent, 18 percent independent without any dependents, and 13 percent independent with dependents. Students with a zero EFC who had either obtained it automatically, through filing the entire Free Application for Federal Student Aid (FAFSA), or by completing the simplified FAFSA.

In general, students whose EFCs were automatically calculated to be zero had the lowest household incomes, Kelchen found. Students who filled out the entire FAFSA tended to have the next-lowest household incomes, and students who qualified for the simplified FAFSA had the highest incomes within the zero EFC group.

“[S]ince differences in household income exist across the three ways that zero EFCs can be assigned, when resources are limited it might be worth considering aid allocation strategies that offer greater assistance to students with automatic zero EFCs over students whose zero EFC resulted from a simplified or full FAFSA,” Kelchen concluded.

“This is particularly relevant for financial aid offices, as unmet need from the neediest students is often far in excess of institutional financial aid budgets,” he noted.

Kelchen also studied Pell Grant receipt among the students – nearly all of whom continued to qualify for Pell after receiving a zero EFC in their first year, he found.

“The consistency of Pell awards for zero-EFC students suggests that policymakers and lawmakers should strongly consider policies designed to reduce the financial aid filing burden for the neediest students,” Kelchen advised. “One example would be using ‘prior-prior year’ (PPY) financial data to determine Pell eligibility, which would use data from the previous tax year to complete the FAFSA and would allow students and their families to receive Pell notification up to one year earlier than is possible under current rules.”

For more on Kelchen’s methods and findings, please see “Financial Need and Aid Volatility among Students with Zero Expected Family Contribution,” published in the latest edition of NASFAA’s Journal of Student Financial Aid



Publication Date: 2/5/2015

Mary M | 2/5/2015 8:50:51 AM

Interesting conclusion that zero efc's have the lowest family income, came across one where the student made 30,000 and parent made 12,000 family of three who receive food stamps. Yes they did data retrieval from the IRS

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