Expected family contributions for college loans might be going away, thanks to COVID-19

Nestled somewhere in the 5000-page COVID relief bill signed earlier this month, there was also a significant change to the Free Application for Federal Student Aid (FAFSA) form: the deceptively-named Expected Family Contribution is being replaced by a "Student Aid Index."

Kenosha News sums this up succinctly:

The appropriations bill renames EFC to "student aid index" (SAI) to make clear the number a family sees after filing the FAFSA isn't the amount of money they're required to pay for college. Instead, it's an indicator of their financial need. The bill now also makes it possible for a student's SAI to be negative, making it easier for a college to identify the students with the most financial need.

The New York Times has a lot more context about the history and ideology behind the Expected Family Contribution, as well as everything that went wrong with it.

For decades now, families have been baffled by the E.F.C., the output of a federal formula that uses income and some household assets. Given that it doesn't account for parents' own student debts, for instance, plenty of people wondered whether the extra-large number was what they were supposed to pay for four years of college, not just one. It wasn't.

Then there are the words themselves. The great expectation that felt more like a demand. The unspoken assumption that, of course, families would step up and pay — parents, really, in the case of most students hoping to matriculate straight from high school. And the notion that this was a mere contribution, bathed in niceties, when in reality the bill could spiral well into the six figures.


The underlying formula that determines the new index will change some, too — many more people will get federal Pell grants for lower-income students or qualify for the maximum amount. Other tweaks may mean even more disappointment for higher-income parents when the new index produces an even larger dollar figure than the E.F.C. did. (Their children could still get a more generous need-based aid offer from many schools than what the new index computes, or they might receive merit aid — which does not depend on financial need — from a college that wants them badly enough.)

My own parents are still reeling from the EFC, which basically saw their raw incomes and a generous interpretation of their assets and decided "Great well then you can contribute at least half of that to your kid's college every year, right?" with very little regard for other outstanding financial obligations, or changing employment situations.

This is probably a factor in why most of my student loans came from so-called "private" lenders±who, let's be real, are just part of the Regulatory State, but don't have to comply with any student loan relief legislation.

Higher education is great, but it'd be even better if the whole system hadn't been setup like some kind of pyramid scheme.

FAFSA's Expected Family Contribution Is Going Away. Good Riddance. [Ron Lieber / New York Times]

5 Big FAFSA Changes Are Coming [Brianna McGurran / Kenosha News]

Image: Public Domain via NeedPix