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EFC For Summer

Beginning with the 2000-2001 award year, the following changes occurred in the alternate, 1- to 12-month expected family contribution (EFC) recorded on the output document (ISIR or SAR) generated by the Central Processing System (CPS):

For dependent students, the parents' contribution is adjusted up or down based on the number of months of enrollment. See the Federal Student Aid Handbook, Volume 1 - Student Eligibility, Chapter 6 for the parental contribution calculation formula and the Simplified Worksheet for Formula A.
For both independent and dependent students, the student's contribution is adjusted down for periods of enrollment that are less than nine months. For periods greater than nine months, there is no adjustment to the student's contribution for either independent or dependent students.

The lack of any adjustment in the student's contribution for periods of enrollment that are greater than nine months results in the following:

For independent students, the alternate EFC for 9- through 12-month enrollment periods will be the same, because no adjustment is made to the student's contribution.
Generally, for dependent students, the alternate EFC changes for each of the 9-, 10-, 11-, and 12-month periods because the parent's contribution is adjusted upward for each month.

This explains why financial aid personnel may see no difference between the 9- and 12-month EFCs for some students, while the alternate 9-, 10-, 11- and 12-month EFCs for other students are adjusted upward.

When awarding campus-based, Direct Loan Program, or Federal Family Education Loan (FFEL) Program funds, a school may always use the alternate EFC figure from the student's output document that corresponds to the number of months in the enrollment period. For example, if the summer enrollment period is two months in length, the school may use the 2-month alternate EFC on the Institutional Student Information Record (ISIR) to calculate the student's Federal Stafford Loan eligibility. However, in some situations, using the alternate EFC from the ISIR that corresponds to the summer period of enrollment will result in double-counting the student's contribution.

EXAMPLE
An independent student enrolls in a 3-month summer term and a 9-month academic year. At the beginning of the summer term, the school certifies a Federal Stafford Loan for the entire 12-month enrollment period using the alternate 12-month EFC of $10,948. Keep in mind that there is no difference between the student's contribution for 9-, 10-, 11- and 12-month periods. This independent student's contribution (and EFC) for each of the 9-, 10-, 11-, and 12-month enrollment periods is $10,948. If, on the other hand, the school certifies a summer loan separately from the subsequent academic year loan, the school may use the 3-month alternate EFC of $3,415 for the summer enrollment period, and the 9-month EFC for the academic year loan. When a Federal Stafford Loan is awarded separately for summer and the subsequent academic year, the student's combined contribution (and EFC) for both enrollment periods totals $13,488 as compared with $10,073 when the entire 12-month period is packaged at once. The effect created by using separate, alternate EFCs for each of the separate summer and academic year enrollment periods in this example is referred to as double-counting the student's contribution.

There are two approaches the U.S. Department of Education (USDE) authorizes to avoid this inconsistency. These alternative approaches may be used only when calculating eligibility for campus-based, FFEL Program, and Direct Loan Program funds.

APPROACH #1
Summer follows an academic year enrollment period

If summer follows the academic year enrollment period in the award year, the school may subtract the 9-month EFC from the alternate EFC that corresponds to the total number of months in which the student will be enrolled during the award year.

Example (independent student):
The student enrolls for the academic year of nine months, and subsequently enrolls for a summer term of two months. The school calculates the student's Federal Stafford Loan eligibility for the summer term separately from the academic year enrollment period. The school subtracts the 9-month EFC from the alternate EFC that corresponds to the total number of months for which the student will be enrolled during the award year (2 + 9 = 11). The student's 9-month EFC is $1,000. Since there is no difference between the student's contribution for 9- through 12-month enrollment periods, the alternate 11-month EFC is also $1,000. The difference between the two EFC figures is zero. A zero EFC is used to determine eligibility for the student's campus-based, FFEL Program, or Direct Loan Program award for the summer enrollment period.

Provided that the student has remaining annual loan limit eligibility for a Federal Stafford Loan during the summer enrollment period, a zero EFC may increase the student's subsidized Federal Stafford Loan eligibility. However, there is no similar impact on the student's eligibility for a Federal Pell Grant. A school must not use the approach described above to determine the EFC used for calculating a summer Federal Pell Grant award. A school must always use the primary 9-month EFC to determine Federal Pell Grant eligibility even if the period of enrollment is greater or less than nine months. The student's Federal Pell Grant award for a summer period is a prorated portion of the student's annual award. See the Federal Student Aid Handbook Volume 3 - Pell Grants for more detailed information about calculating a student's Federal Pell Grant for a summer period.

Summer precedes an academic year enrollment period

If summer is considered part of the upcoming award year, the school uses the appropriate alternate EFC to determine eligibility for the summer enrollment period. The school subtracts the alternate EFC used for summer from the alternate EFC that corresponds to the total number of months in which the student will be enrolled for the entire award year, thereby distributing the student's contribution over the entire award year.

Example (dependent student):
The student enrolls for a 2-month summer term, and subsequently enrolls for the 9-month academic year. The school uses the 2-month EFC of $2,657 to calculate Federal Stafford Loan eligibility for the summer term. Subsequently, when calculating eligibility for the 9-month academic year enrollment period, the school subtracts the alternate EFC used for the summer from the alternate EFC that corresponds to the number of months (11) that the student will be enrolled during the entire award year. The 11-month alternate EFC for this student is $12,132 ($12,132 - $2,657 = $9,475). The difference, $9,475, is used to package the student's campus-based, FFEL Program or Direct Loan Program award for the 9-month enrollment period.

APPROACH #2

This second alternative involves calculating a monthly share of the EFC corresponding to the student's total enrollment period for the award year. The monthly share is then multiplied by the number of months in the summer enrollment period to determine the summer EFC. Then the monthly share is multiplied by the number of months in the regular academic year to determine the EFC for the academic year enrollment period. This approach can be used when summer precedes the academic year in the award year, and it can be used when summer follows the academic year, provided the school knows the student's summer enrollment plans at the time the student's academic year aid is packaged.

In May 2001, Jeff Baker, USDE, announced in writing that, until the USDE issues an official announcement on EFC policy, schools may continue to use the informal guidance described above or their own reasonable interpretation of the statutory requirements for determining the EFC for a student who is enrolled for a summer period. Mr. Baker indicated that any future guidance would be published with an effective date that provided schools with sufficient lead time to modify systems and procedures. No official guidance has been published since that announcement.

Schools that attended the NASFAA 2000 Spring Training module Financial Aid for Summer Periods may refer to the training materials for additional information about the alternative approaches described above. NASFAA members may also wish to reference NASFAA newsletters dated March 23, 2000, and August 14, 2000, for additional discussion on this topic.