THE EFC FORMULA, 2021–2022 – ed

 

 

THE EFC FORMULA, 2021–2022

What is the EFC?

The Expected Family Contribution (EFC) is a number that determines students’ eligibility for
certain types of federal student aid. This number is calculated with the EFC formulas, which use
the information that students provide on the Free Application for Federal Student Aid (FAFSA®).
Financial aid administrators (FAAs) subtract the EFC from students’ cost of attendance to
determine their need for the following federal student financial assistance offered by the U.S.
Department of Education (the Department):

• Federal Pell Grants,

• Subsidized Loans through the William D. Ford Federal Direct Loan Program,

• Federal Supplemental Educational Opportunity Grants (FSEOG), and

• Federal Work-Study (FWS).

The Teacher Education Assistance for College and Higher Education Grant (TEACH Grant) is a
non-need-based federal program for which a student must also use the FAFSA to apply.

The methodology for determining the EFC is found in Part F of Title IV of the Higher Education
Act of 1965, as amended (HEA). Tables used in the computation of the EFC for the 2021–2022
Award Year were published in the June 5, 2020 Federal Register
(ifap.ed.gov/sites/default/files/attachments/2020-06/FR060520.pdf) (85 FR 34605).

What is the source of data used in EFC calculations?

All data used to calculate a student’s EFC comes from the information the student provides on
the FAFSA. A student may submit a FAFSA:

• by using FAFSA on the Web,
• by using the myStudentAid mobile application,
• by filing an application electronically through a school, or

• by mailing a FAFSA to the Central Processing System (CPS).

Students who applied for federal student aid in the previous award year may be eligible to
reapply using a renewal FAFSA online. Applying for federal aid is free, but to be considered for
non-federal aid (such as institutional aid), students may have to fill out additional forms, which
might require fees.

We encourage applicants to complete the FAFSA electronically, because there are edits that
reduce applicant errors and customize the questions presented based on answers to prior
questions. The electronic version also contains additional instructions and help features and
allows the Department to send results to the students and schools more quickly.

The EFC Formula, 2021–2022 1

Who processes the FAFSA, and how are students notified
of their EFC?

The CPS receives the student’s FAFSA data, either electronically or on the paper application,
and uses it to calculate an EFC. After the FAFSA has been processed, the CPS sends the student
an output document containing information about his or her application results. This document,
which can be paper or electronic, is called a Student Aid Report (SAR). The SAR lists all the
information from the application and indicates whether the application was complete and signed.
If the application is complete and signed and there are no data conflicts, the SAR also includes
the student’s EFC. Students are instructed to carefully check the accuracy of the information
on the SAR. All schools listed on the student’s FAFSA receive application information and
processing results in an electronic file called an Institutional Student Information Record (ISIR).

Which EFC Formula Worksheet should be used?

There are three regular formulas and a simplified version of each:

• Formula A, for dependent students;

• Formula B, for independent students without dependents other than a spouse; and

• Formula C, for independent students with dependents other than a spouse.

The simplified versions of the EFC formula worksheets do not use assets in the calculation. See
pages 4 and 5 for information on which students qualify for the simplified formulas. Instructions
for determining which applicants are eligible for the automatic zero EFC calculation are included
in each worksheet. See page 5 for more information on which students qualify for an automatic
zero EFC.

Formula A Worksheet ………………………………………………………….pages 9–12

Simplified Formula A Worksheet ……………………………………pages 13–16

Formula B Worksheet ………………………………………………………….pages 17–18

Simplified Formula B Worksheet …………………………………….pages 19–20

Formula C Worksheet …………………………………………………………pages 21–22

Simplified Formula C Worksheet …………………………………….pages 23–24

Tables ………………………………………………………………………………….pages 25–29

Note: Do not complete the shaded areas in the simplified worksheets;
asset information is not required in the simplified formulas.

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The EFC Formula, 2021–2022

What is the definition of an independent student?

Because the EFC formula for a dependent student uses parental data and the two formulas for
independent students do not, the first step in calculating a student’s EFC is to determine his or
her dependency status. For the 2021–2022 Award Year, a student is automatically determined to
be independent for federal student aid purposes if he or she meets one or more of the following
criteria:

• The student was born before January 1, 1998.

• The student is married or separated (but not divorced) as of the date of the application.

• At the beginning of the 2021–2022 school year, the student will be enrolled in a master’s or
doctoral degree program (such as MA, MBA, MD, JD, PhD, EdD, or graduate certificate,
etc.).

• The student is currently serving on active duty in the U.S. Armed Forces or is a National

Guard or Reserves enlistee called into federal active duty for purposes other than training.

• The student is a veteran of the U.S. Armed Forces (see the definition in the box on page 4).

• The student has or will have one or more children who receive more than half of their support

from him or her between July 1, 2021, and June 30, 2022.

• The student has dependent(s) (other than children or spouse) who live with him or her and

who receive more than half of their support from the student, now and through June 30, 2022.

• At any time since the student turned age 13, both of the student’s parents were deceased, or

the student was in foster care or was a dependent or ward of the court.

• As determined by a court in the student’s state of legal residence, the student is now, or was
upon reaching the age of majority, an emancipated minor (that is, released from control by
his or her parent or guardian).

• As determined by a court in the student’s state of legal residence, the student is now, or was

upon reaching the age of majority, in legal guardianship.

• On or after July 1, 2020, the student was determined by a high school or school district

homeless liaison to be an unaccompanied youth who was homeless or was self-supporting
and at risk of being homeless.

• On or after July 1, 2020, the student was determined by the director of an emergency shelter
or transitional housing program funded by the U.S. Department of Housing and Urban
Development to be an unaccompanied youth who was homeless or was self-supporting and at
risk of being homeless.

• At any time on or after July 1, 2020, the student was determined by a director of a runaway
or homeless youth basic center or transitional living program to be an unaccompanied youth
who was homeless or was self-supporting and at risk of being homeless.

• The student is determined by the college financial aid administrator to be an unaccompanied

youth who is homeless or is self-supporting and at risk of being homeless.

For students who do not meet any of the above criteria but who have documented unusual
circumstances, an FAA can override their dependency status from dependent to independent. For
information about dependency overrides, see the Application and Verification Guide, which is
part of the Federal Student Aid Handbook and can be found on the IFAP Web site.

The EFC Formula, 2021–2022

3

TERMS USED IN THE DEFINITION OF AN INDEPENDENT STUDENT

LEGAL DEPENDENT. Any children of the student who receive more than half
of their support from the student (children do not have to live with the student),
including a biological or adopted child. Also, any persons, other than a spouse, who
live with the student and receive more than half of their support from the student now
and will continue to receive more than half of their support from the student through
June 30, 2022.

VETERAN. A student who: (1) has engaged in active service in the U.S. Armed
Forces (Army, Navy, Air Force, Marines, or Coast Guard), or has been a member of
the National Guard or Reserves who was called to active duty for purposes other than
training, or was a cadet or midshipman at one of the service academies, or attended
a U.S. military academy preparatory school, and (2) was released under a condition
other than dishonorable. A veteran is also a student who does not meet this definition
now but will by June 30, 2022.

Which students qualify for the simplified EFC formulas?

The following criteria determine which students have their EFCs calculated by a simplified
formula. Assets are not considered in the simplified EFC formulas.

For the 2021–2022 Award Year, a dependent student qualifies for the simplified EFC formula if
both (1), below, and (2), on the next page, are true:

(1) Anyone included in the parents’ household size (as defined on the FAFSA) received
benefits during 2019 or 2020 from any of the designated means-tested federal benefit
programs: the Medicaid Program, the Supplemental Security Income (SSI) Program, the
Supplemental Nutrition Assistance Program (SNAP), the Free and Reduced Price School
Lunch Program, the Temporary Assistance for Needy Families (TANF) Program1, and the
Special Supplemental Nutrition Program for Women, Infants, and Children (WIC);

the student’s parents:
• filed a 2019 IRS Form 1040, but did not file a Schedule 12,

• filed a tax form from a Trust Territory3, or

• were not required to file any income tax return;

OR

OR

the student’s parent is a dislocated worker.

1 The TANF Program may have a different name in the student’s or student’s parents’ state.
2 Applicants may also qualify if they only filed a Schedule 1 to report the following additions or
adjustments to income: unemployment compensation, educator expenses, IRA deduction, student loan
interest deduction, Alaska Permanent Fund dividend, or virtual currency.
3 For qualifying for the simplified or automatic zero EFC calculations, the following 2019 income
tax forms are considered for a Trust Territory: the income tax return required by the tax code of the
Commonwealth of Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Republic of the
Marshall Islands, the Federated States of Micronesia, or Palau.

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The EFC Formula, 2021–2022

(2) The combined 2019 income of the student’s parents is $49,999 or less.

•

•

For tax filers, use the parents’ adjusted gross income from the tax return to determine
if income is $49,999 or less.
For non-tax filers, use the income shown on the 2019 W-2 forms of both parents (plus
any other earnings from work not included on the W-2s) to determine if income is
$49,999 or less.

For the 2021–2022 Award Year, an independent student qualifies for the simplified EFC formula
if both (1) and (2) below are true:

(1) Anyone included in the student’s household size (as defined on the FAFSA) received
benefits during 2019 or 2020 from any of the designated means-tested federal benefit
programs: the Medicaid Program, the SSI Program, SNAP, the Free and Reduced Price
School Lunch Program, the TANF Program4, and WIC;

the student and student’s spouse (if the student is married) both

•

filed a 2019 IRS Form 1040, but did not file a Schedule 15,

filed a tax form from a Trust Territory6, or
•
• were not required to file any income tax return;
OR

the student (or the student’s spouse, if any) is a dislocated worker.

AND

OR

AND

(2) The student’s (and spouse’s) combined 2019 income is $49,999 or less.

•

•

For tax filers, use the student’s (and spouse’s) adjusted gross income from the tax
return to determine if income is $49,999 or less.
For non-tax filers, use the income shown on the student’s (and spouse’s) 2019 W-2
forms (plus any other earnings from work not included on the W-2s) to determine if
income is $49,999 or less.

Which students qualify for an automatic zero EFC
calculation?

Certain students are automatically eligible for a zero EFC. The requirements for receiving an
automatic zero EFC are the same as those for the simplified EFC calculation except for these
differences:

• The income threshold for the parents of dependent students and for independent students and
their spouses is $27,000 or less (for an automatic zero EFC) instead of $49,999 or less (for
the simplified EFC calculation), and

•

For independent students, those without dependents other than a spouse cannot receive an
automatic zero EFC.

New for 2021-2022: The income threshold for an automatic zero EFC increased to $27,000 for
the 2021-2022 Award Year.
4 See note 1 on page 4.
5 See note 2 on page 4.
6 See note 3 on page 4.
The EFC Formula, 2021–2022

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For the 2021–2022 Award Year, a dependent student automatically qualifies for a zero EFC if
both (1) and (2) below are true:

(1) Anyone included in the parents’ household size (as defined on the FAFSA) received
benefits during 2019 or 2020 from any of the designated means-tested federal benefit
programs: the Medicaid Program, the SSI Program, SNAP, the Free and Reduced Price
School Lunch Program, the TANF Program7, and WIC;
OR

the student’s parents:
• filed a 2019 IRS Form 1040, but did not file a Schedule 18,

• filed a tax form from a Trust Territory9, or
• were not required to file any income tax return;

OR

AND

the student’s parent is a dislocated worker.

(2) The combined 2019 income of the student’s parents is $27,000 or less.

• For tax filers, use the parents’ adjusted gross income from the tax return to

determine if income is $27,000 or less.

• For non-tax filers, use the income shown on the 2019 W-2 forms of both parents

(plus any other earnings from work not included on the W-2s) to determine if income
is $27,000 or less.

An independent student with dependents other than a spouse automatically qualifies for a
zero EFC if both (1), below, and (2), on the next page, are true:

(1) Anyone included in the student’s household size (as defined on the FAFSA) received
benefits during 2019 or 2020 from any of the designated means-tested federal benefit
programs: the Medicaid Program, the SSI Program, SNAP, the Free and Reduced Price
School Lunch Program, the TANF Program10, and WIC;
OR

the student and student’s spouse (if the student is married) both

• filed a 2019 IRS Form 1040, but did not file a Schedule 111,

• filed a tax form from a Trust Territory12, or
• were not required to file any income tax return;

OR

the student (or the student’s spouse, if any) is a dislocated worker.

7 See note 1 on page 4.
8 See note 2 on page 4.
9 See note 3 on page 4.
10 See note 1 on page 4.
11 See note 2 on page 4.
12 See note 3 on page 4.

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The EFC Formula, 2021–2022

AND

(2) The student’s (and spouse’s) combined 2019 income is $27,000 or less.

• For tax filers, use the student’s (and spouse’s) adjusted gross income from the tax

return to determine if income is $27,000 or less.

• For non-tax filers, use the income shown on the student’s (and spouse’s) 2019 W-2
forms (plus any other earnings from work not included on the W-2s) to determine if
income is $27,000 or less.

Note: An independent student without dependents other than a spouse is not eligible for an
automatic zero EFC.

Why might a calculation of an EFC using these worksheets
differ from the EFC reported on a student’s SAR?

When it appears that an applicant has reported inconsistent data, the CPS may make certain
assumptions to resolve the inconsistency. These assumed values, which are reported on the
student’s SAR, are used to calculate the student’s EFC. Therefore, in some cases, the EFC
produced by these worksheets may differ from the EFC produced by the CPS if the assumed
values are not used.

In addition, to help reconcile EFC Formula Worksheet calculations with those of the CPS, all
calculations should be carried to three decimal places and then rounded to the nearest whole
numbers. Round upward for results of .500 to .999, round downward for results of .001 to .499.
Rounding should be performed so that the intermediate value that is the result of each step does
not have any decimal digits.

The EFC Formula, 2021–2022 7

WORKSHEETS AND TABLES

New for 2021-2022 – In an effort to simplify the guide, the tables were combined and moved
to follow the worksheets at the end of the document.

Formula A Worksheet ………………………………………………………………… pages 9–12
Simplified Formula A Worksheet ………………………………………………… pages 13–16

Dependent Students

Independent Students Without Dependents Other than a Spouse

Formula B Worksheet………………………………………………………………… pages 17–18
Simplified Formula B Worksheet ………………………………………………… pages 19–20

Independent Students With Dependents Other than a Spouse

Formula C Worksheet………………………………………………………………… pages 21–22
Simplified Formula C Worksheet ………………………………………………… pages 23–24

Tables

Table 1 – State and Other Tax Allowance
(Formulas A [parents only] and C) ………………………………… page 25
Table 2 – State and Other Tax Allowance
(Formulas A [student only] and B) ………………………………… page 26
Table 3 – Social Security Tax (Formulas A, B, and C) …………………… page 27

Table 4 – Income Protection Allowance (Formula A) ……………………. page 27
Table 5 – Income Protection Allowance (Formula C) ……………………. page 28
Table 6 – Business/Farm Net Worth Adjustment
(Formulas A [parents only], B, and C) …………………………… page 28
Table 7 – Education Savings and Asset Protection Allowance
…………………………… page 29

Table 8 – Contribution from AAI (Formulas A and C) …………………… page 29

(Formulas A [parents only], B, and C)

Note: Do not complete the shaded areas in the simplified worksheets; asset information is
not required in the simplified formulas.

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The EFC Formula, 2021 2022

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