How does EFC affect potential loan amount?

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jazzluvr
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How does EFC affect potential loan amount?

Postby jazzluvr » Tue Apr 27, 2010 3:47 pm

The FAFSA website computed, and told me, my EFC, but didn't explain how it is used. Someone told me the EFC limits your loan amount by being the (minimum) you're expected to pay for your COA per year - that for example if your EFC is $20K and the school's COA is $50K, the school would not award you more than $30K in loans per year.

Is this correct?

03121202698008
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Re: How does EFC affect potential loan amount?

Postby 03121202698008 » Tue Apr 27, 2010 9:35 pm

jazzluvr wrote:The FAFSA website computed, and told me, my EFC, but didn't explain how it is used. Someone told me the EFC limits your loan amount by being the (minimum) you're expected to pay for your COA per year - that for example if your EFC is $20K and the school's COA is $50K, the school would not award you more than $30K in loans per year.

Is this correct?


The EFC is virtually irrelevant as I understand it. You'd have to get a GradPlus or like loan to cover the EFC instead of Stafford. Stafford loans wouldn't cover the entire student budget anyhow so you'd always have this left over amount to be financed with GradPlus.

jazzluvr
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Re: How does EFC affect potential loan amount?

Postby jazzluvr » Tue Apr 27, 2010 9:54 pm

blhoward2 wrote:
jazzluvr wrote:The FAFSA website computed, and told me, my EFC, but didn't explain how it is used. Someone told me the EFC limits your loan amount by being the (minimum) you're expected to pay for your COA per year - that for example if your EFC is $20K and the school's COA is $50K, the school would not award you more than $30K in loans per year.

Is this correct?


The EFC is virtually irrelevant as I understand it. You'd have to get a GradPlus or like loan to cover the EFC instead of Stafford. Stafford loans wouldn't cover the entire student budget anyhow so you'd always have this left over amount to be financed with GradPlus.


Huh??? Can you clarify? I have no idea what you're talking about. The "EFC is irrelevant" but I'd have to get a GradPlus or whatever "to cover it"? I'm missing the most basic info here. I still have no idea how you're thinking about the EFC...

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UrbanAchievers
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Re: How does EFC affect potential loan amount?

Postby UrbanAchievers » Tue Apr 27, 2010 10:04 pm

When considering the amount of loans one can take out, EFC is not considered. If the school's COA is $50k, and the financial aid dept says you can borrow $20k in federal loans, you may borrow up to $30k in GRAD PLUS loans, regardless of EFC.

jazzluvr
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Re: How does EFC affect potential loan amount?

Postby jazzluvr » Tue Apr 27, 2010 10:06 pm

UrbanAchievers wrote:When considering the amount of loans one can take out, EFC is not considered. If the school's COA is $50k, and the financial aid dept says you can borrow $20k in federal loans, you may borrow up to $30k in GRAD PLUS loans, regardless of EFC.


Then why does the FAFSA go to so much trouble to compute it and inform you about it, and tell you the result of that calculation, and explain that that the EFC is used to calculate the amount of your possible federal loan?

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UrbanAchievers
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Re: How does EFC affect potential loan amount?

Postby UrbanAchievers » Tue Apr 27, 2010 10:19 pm

jazzluvr wrote:
UrbanAchievers wrote:When considering the amount of loans one can take out, EFC is not considered. If the school's COA is $50k, and the financial aid dept says you can borrow $20k in federal loans, you may borrow up to $30k in GRAD PLUS loans, regardless of EFC.


Then why does the FAFSA go to so much trouble to compute it and inform you about it, and tell you the result of that calculation, and explain that that the EFC is used to calculate the amount of your possible federal loan?

Federal Loan being the operative words there. When your school send you the financial aid letter, that letter will describe the subsidized an unsubsidized loan amounts you are eligible for. Your EFC was considered in calculating those amounts.

Hope this helps.

jazzluvr
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Re: How does EFC affect potential loan amount?

Postby jazzluvr » Tue Apr 27, 2010 10:46 pm

UrbanAchievers wrote:
jazzluvr wrote:
UrbanAchievers wrote:When considering the amount of loans one can take out, EFC is not considered. If the school's COA is $50k, and the financial aid dept says you can borrow $20k in federal loans, you may borrow up to $30k in GRAD PLUS loans, regardless of EFC.


Then why does the FAFSA go to so much trouble to compute it and inform you about it, and tell you the result of that calculation, and explain that that the EFC is used to calculate the amount of your possible federal loan?

Federal Loan being the operative words there. When your school send you the financial aid letter, that letter will describe the subsidized an unsubsidized loan amounts you are eligible for. Your EFC was considered in calculating those amounts.

Hope this helps.


What I am asking is HOW the EFC comes into the calculation. Does anybody know, or is this some big secret? A friend told me it is the amount that the student (or student's family) is expected to pay (the "expected contribution" from the family) per year, and that the maximum federal loan amount per year will be equal to the COA minus the EFC. Correct or not? Thanks.

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Re: How does EFC affect potential loan amount?

Postby 03121202698008 » Tue Apr 27, 2010 10:48 pm

jazzluvr wrote:
UrbanAchievers wrote:
jazzluvr wrote:
UrbanAchievers wrote:When considering the amount of loans one can take out, EFC is not considered. If the school's COA is $50k, and the financial aid dept says you can borrow $20k in federal loans, you may borrow up to $30k in GRAD PLUS loans, regardless of EFC.


Then why does the FAFSA go to so much trouble to compute it and inform you about it, and tell you the result of that calculation, and explain that that the EFC is used to calculate the amount of your possible federal loan?

Federal Loan being the operative words there. When your school send you the financial aid letter, that letter will describe the subsidized an unsubsidized loan amounts you are eligible for. Your EFC was considered in calculating those amounts.

Hope this helps.


What I am asking is HOW the EFC comes into the calculation. Does anybody know, or is this some big secret? A friend told me it is the amount that the student (or student's family) is expected to pay (the "expected contribution" from the family) per year, and that the maximum federal loan amount per year will be equal to the COA minus the EFC. Correct or not? Thanks.


The EFC is the expected family contribution and Stafford loans cannot be used to cover this portion. But, since Stafford loans max out at $20,500 per year, it doesn't matter because you are always going to have an amount >= the EFC left after using the Stafford loan. It only comes into play at undergrad and cheaper schools where the COA is under $20,500.

Edit:
http://studentaid.ed.gov/PORTALSWebApp/students/english/aideligibility.jsp wrote:The EFC is not the amount of money that your family must provide. Rather, you should think of the EFC as an index that colleges use to determine how much financial aid (grants, loans or work-study) you would receive if you were to attend their school.
Last edited by 03121202698008 on Tue Apr 27, 2010 10:50 pm, edited 1 time in total.

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merichard87
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Re: How does EFC affect potential loan amount?

Postby merichard87 » Tue Apr 27, 2010 10:49 pm

Sir please calm down, you're getting hysterical. And I'm not sure how it works in LS but yes in UG the EFC was used to determine how much you should be able to contribute to your education but I don't recall anyone ever being refused loans to offset EFC. It was mostly used to determine any grants a student was eligible for such as: Pell, B-On-Time and some others.

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thalassocrat
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Re: How does EFC affect potential loan amount?

Postby thalassocrat » Tue Apr 27, 2010 10:50 pm

UrbanAchievers wrote:
jazzluvr wrote:
UrbanAchievers wrote:When considering the amount of loans one can take out, EFC is not considered. If the school's COA is $50k, and the financial aid dept says you can borrow $20k in federal loans, you may borrow up to $30k in GRAD PLUS loans, regardless of EFC.


Then why does the FAFSA go to so much trouble to compute it and inform you about it, and tell you the result of that calculation, and explain that that the EFC is used to calculate the amount of your possible federal loan?

Federal Loan being the operative words there. When your school send you the financial aid letter, that letter will describe the subsidized an unsubsidized loan amounts you are eligible for. Your EFC was considered in calculating those amounts.

Hope this helps.


GradPLUS loans are also federal loans. It might help to clarify you're talking about federal Stafford loans, which have a lower interest rate. Those are capped at $20,500 a year, and the maximum that can be subsidized (that is, it will not accrue interest while you are in school) is $8500. I think, it might be $8000 and then the $12,500 is unsubsidized. Don't quite remember off the top of my head. Anyway, like UrbanAchievers said, the EFC is used to determine how much of your Stafford loan is subsidized. If it's especially high, and I don't know anyone who's had this happen, all it means for law school is that your Stafford loans will be entirely unsubsidized.

It's really more relevant for undergrad, where they use it to determine things like eligibility for Pell Grants and other need-based grants you don't get as a law student.

jazzluvr
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Re: How does EFC affect potential loan amount?

Postby jazzluvr » Tue Apr 27, 2010 10:57 pm

Thank you. I'm starting to get it. :-)

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vanwinkle
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Re: How does EFC affect potential loan amount?

Postby vanwinkle » Tue Apr 27, 2010 11:08 pm

To reiterate what's been said, and hopefully clarify...

EFC helps determine which federal loan programs you're eligible for. However, worst-case scenario, GradPLUS is available to everyone with good credit and is not based on EFC. If you end up being ineligible for Stafford loans you can still get GradPLUS loans. So it only affects which loans you get, not whether you get federal loans.

03121202698008
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Re: How does EFC affect potential loan amount?

Postby 03121202698008 » Tue Apr 27, 2010 11:18 pm

vanwinkle wrote:To reiterate what's been said, and hopefully clarify...

EFC helps determine which federal loan programs you're eligible for. However, worst-case scenario, GradPLUS is available to everyone with good credit and is not based on EFC. If you end up being ineligible for Stafford loans you can still get GradPLUS loans. So it only affects which loans you get, not whether you get federal loans.


I'd be amazed if your EFC ever disqualified you. I make a decent salary, mid $50Ks, have substantial assets including real estate, and both of my parents made $100K+ and I still qualified for everything.

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Re: How does EFC affect potential loan amount?

Postby Anonymous Loser » Tue Apr 27, 2010 11:42 pm

vanwinkle wrote:To reiterate what's been said, and hopefully clarify...

EFC helps determine which federal loan programs you're eligible for. However, worst-case scenario, GradPLUS is available to everyone with good credit and is not based on EFC. If you end up being ineligible for Stafford loans you can still get GradPLUS loans. So it only affects which loans you get, not whether you get federal loans.


To clarify the above clarification, the only way you "end up being ineligible" for Stafford loans is by (1) not being a U.S. citizen or eligible non-citizen; (2) being currently in default on a Title IV loan or grant; (3) not being registered with the Selective Service if under 25 and male; and (4) being convicted of a drug offense that occurred while you were receiving federal aid.

Your EFC can be in the billions, and you will still be eligible for $20,500 in Stafford loan funding. The EFC calculation is only relevant to determine what portion, if any, of that amount the government will make interest payments on while you are enrolled.

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tstyler98
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Re: How does EFC affect potential loan amount?

Postby tstyler98 » Wed Apr 28, 2010 7:08 am

My EFC is above the estimated cost of attendance this year because I worked last year. I still qualify for the full $20,500 but only in unsubsidized loans (no subsidized). They mostly use the EFC to determine if you financially bqualify for the subsidized portion.

bigred77
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Re: How does EFC affect potential loan amount?

Postby bigred77 » Thu Apr 29, 2010 3:21 pm

I'm glad to hear this news as I have an EFC higher than the COA since I'm doing only a PT program. Can anyone verify that the rules are the same for FT and PT (PT = 9-10 hrs per semester.)

Also, does anyone know how repayment works while still in school? I mean hypothetically if I really wanted to limit my debt but still retain financial flexability could I take out the full subsidized loan (if i qualify for any) each semester and then use the rest of my unsubsidized loan to cover the rest of my tuition, fees, and books. Could I then say send in $500 a month starting immediately to begin paying off ONLY my unsubsidized loans and then do the same thing in subsequesnt semesters. Basically i want to use this thing like a line of credit with a reasonable interest rate if that makes any sense. I would be all for leaving the subsidised loans to pile up while in school as long as theres no interest, if thats possible.

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tstyler98
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Re: How does EFC affect potential loan amount?

Postby tstyler98 » Fri Apr 30, 2010 8:06 am

bigred77 wrote:I'm glad to hear this news as I have an EFC higher than the COA since I'm doing only a PT program. Can anyone verify that the rules are the same for FT and PT (PT = 9-10 hrs per semester.)

Also, does anyone know how repayment works while still in school? I mean hypothetically if I really wanted to limit my debt but still retain financial flexability could I take out the full subsidized loan (if i qualify for any) each semester and then use the rest of my unsubsidized loan to cover the rest of my tuition, fees, and books. Could I then say send in $500 a month starting immediately to begin paying off ONLY my unsubsidized loans and then do the same thing in subsequesnt semesters. Basically i want to use this thing like a line of credit with a reasonable interest rate if that makes any sense. I would be all for leaving the subsidised loans to pile up while in school as long as theres no interest, if thats possible.


I was originally supposed to go PT (while working full-time) starting Aug 2009, but deferred and now am going full-time starting this fall. I still qualified for subsidized and unsubsidized last year (I didn't qualify for subsidized this time due to receiving a scholarship, which pushed my EFC above the cost of attendance), so you should be good.

I'm pretty sure you can make payments while in school. The best thing would be to talk to someone in the lending department. I believe you just mail in a payment with a letter saying how you would like the payment applied (ie. only to the unsubsidized portion). Without the letter, I think they'll apply it to across all loans.




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