3. Unrealistic family spending assumptions. The government's formula doesn't make any accommodation for parents whose disposable income is reduced because of their own student loan bills, even though a growing number of parents are still paying off their own student loans as their kids enter college.
These policies mean the EFC is "at best, a very harsh assessment of families' ability to pay," says Mark Kantrowitz, publisher of FinAid.org. At worst, he says, it is "somewhat unrealistic...and archaic."
Making the EFC even harsher is the grim reality that most colleges, especially public universities, don't have enough grant money these days to ensure that every student only has to pay the official EFC. Students fill those financial gaps with loans, extra work, or "merit aid," such as scholarships awarded because of grades or special skills.
[Read 8 rules for maximizing merit aid.]
Federal officials note they have made some improvements to the EFC in the last couple years by, for example, raising the ceiling for the amount a student or family can earn and still receive an EFC of $0 from about $30,000 in the 2010 academic year to $31,000 in 2011.
In addition, in 2009, the government told colleges to lower the EFCs of students who appealed for extra aid because they had expenses or family problems that weren't accounted for in the standard form, such as unusually high medical expenses or the loss of a job.
[Read 10 tips for a successful appeal.]
And since colleges are free to calculate their own EFCs for their own aid money, some colleges (generally elite, wealthy universities) give enough scholarships to ensure that some students—especially those with top grades or other special talents—pay less than their federal EFC.
The government has also ordered colleges to post on their websites "net price calculators" so students and parents can estimate how much they are actually likely to pay. Many colleges, including Drexel University, West Virginia University, and Williams College, have already launched calculators ahead of the official deadline is Oct. 29, 2011.
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