What The New Student Aid Index Means For Families Paying For College

Colleges and universities have always used certain data and formulas to figure out how much financial aid students can receive, typically based on the information families input when they fill out the Free Application for Federal Student Aid (FAFSA) each year.

Previously, this information has been used to figure out something called the Expected Family Contribution (EFC), which is essentially an out-of-pocket amount students can expect to pay for school after taking federal student aid into account. However, legislation passed in December of 2020 aimed to simplify the process and will eliminate the EFC completely.