Report Details How to Use Negative Expected Family Contribution to Support Students With Unmet Need

Related topics in the Ref Desk: Expected Family Contribution; Federal Supplemental Educational Opportunity Grant Program (FSEOG); Cost of Attendance

By Owen Daugherty, NASFAA Staff Reporter

Many in the financial aid profession and broader higher education community agree the expected family contribution (EFC) figure presented to prospective students once they complete the FAFSA is a confusing and at times inaccurate representation of what an individual’s family should contribute to pay for college. Luckily, changes are coming that could better help aid offices serve the neediest students.

While the term is set to be retired in the coming years as part of a FAFSA overhaul and replaced by a Student Aid Index (SAI) that incorporates a negative $1,500 floor, a new study from the Hope Center for College, Community, and Justice released Wednesday aims to show how presenting students with a negative EFC — and eventually negative SAI — will help students better understand their true out-of-pocket costs to pay for college.

To conduct the study, the Hope Center partnered with six institutions located in Texas — four community colleges and two regional public universities — to compute the negative EFCs for all their financial aid applicants in the 2018-19 academic year. At four of the six institutions, more than 70% of financial aid applicants had a negative EFC.

The study comes at an important time. When the EFC ultimately becomes obsolete and the SAI takes its place, with it will come the possibility for students with greater need to have a negative SAI, which could prove helpful by more accurately depicting student financial need.

As the new study puts it, the “new SAI, with its potentially negative value, will ameliorate some of the challenges faced by students with unmet need and unrealistic EFCs.”

The study does note, however, that the negative EFC analyzed in this report — and the negative $1,500 that will be allowed once the SAI goes into effect — still does not fully reflect the unmet need of students who need additional financial aid the most.

“Our analysis shows that many of those with the greatest financial need — particularly dependent students and independents with children — will remain underserved because they have negative EFCs much greater than [negative] $1,500,” the study states. 

Notably, the study found that in the financial aid applications it reviewed, most that had negative EFCs were greater than $1,500. While the new SAI will have a few different calculations in the model it uses to determine a student’s SAI, it is essentially just a new name for the EFC.

As the study noted, “the changes [to the formula] do not seem likely to substantially alter” the findings, meaning that “true student financial need is significantly underrepresented by both formulas.”

The negative EFC analyzed in the study can be utilized at both the state and institutional level to provide better support to students by identifying those that need additional support. One institution that participated in the study reported it would use negative EFC data to help identify students who may qualify for public benefits such as the Supplemental Nutrition Assistance Program (SNAP). Another said it would use the data as part of reevaluating how it calculates the cost of attendance for students.

While the negative $1,500 floor the new SAI will bring is a step in the right direction, it does not go far enough to identify students with additional unmet need, according to the study. 

However, the study laid out several practical applications institutions can put into practice now with negative EFC information, such as identifying students who could use additional support in the form of emergency aid grants.

Further, even though the new negative $1,500 SAI does not go into effect until 2023, institutions can be proactive and plan how they will use the new information to support students with negative SAIs, the study notes.

The study asserts that since the Department of Education (ED) will have data showing the full negative SAI for all students even though the cap is negative $1,500, it should provide institutions with the full negative SAI for all students.

“Possessing these true values will help institutions direct additional support to the students with the greatest financial need, above and beyond the newly created [negative] $1,500 SAI,” the study states.

The study also recommends ED provide institutions with clear guidance on how to use the negative SAI figure in practice.

Recommended guidelines include proactively informing students about how to apply for a professional judgement appeal if something changes in their financial situation, providing information to students with negative SAI regarding public benefits to connect them with support beyond traditional financial aid, and how to best direct the awarding of campus-based aid such as Supplemental Educational Opportunity Grant (SEOG) dollars to the students with the greatest financial need.


Publication Date: 5/5/2021

David S | 5/5/2021 5:5:49 PM

I just got a chance to read the paper, and I don't see anything new here. Many aid professionals have been talking about the concept of a negative EFC for years; it would acknowledge the impact of students' lost employment opportunities, dependent students helping to support their parents by chipping in with household expenses, financial necessities that don't quite fall into any COA category, etc. A negative EFC would help us fine tune need assessments better, we could further separate the needy from the extremely needy from the extraordinarily needy or however you want to look at it.

But without more aid from all sources, and/or a significant and universal increased commitment to funding at least public higher education (ha!), all a negative EFC (or SAI) ultimately results in is more unmet need.

Tony T | 5/5/2021 10:33:49 AM

It will be interesting to see how schools (mostly privates) that offer "institutional Need-based" aid will address this new SAI into their need calculations. By utilizing a negative SAI, this would result in an increase in funding provided by the institutions, since we don't see increases in assistance from outside sources (i.e. federal/state). Budgeting could get very interesting.

Niurka L | 5/5/2021 8:44:06 AM

Personally, I don't see how this will be helpful if federal aid will remain the same. This article does not mention anything about additional benefits to students with negative SAI's other than the universities trying to refer them elsewhere for additional help. And where is elsewhere?

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.

Related Content

Annual Business Meeting & Policy Update: Spring 2024: Annual Business Meeting & Policy Update: Spring 2024


Policy Update & Final FAFSA Countdown : Policy Update & Final FAFSA Countdown


View Desktop Version