College affordability through the implementation of various financial aid programs has been the goal of not only the federal government, but also of state governments, numerous philanthropic organizations, and many individual postsecondary institutions. Financial aid data, especially metrics regarding unmet need, can be very helpful in determining the effectiveness of financial aid awarding strategies on college affordability. The University of Hawai‘i has developed several metrics around the use of EFC bands to assist in determining how successful aid-awarding policies are so adjustments can be made quickly and easily by financial aid officers.

Average Net Cost

Students with lower family incomes (and lower Free Application for Federal Student Aid [FAFSA] expected family contributions) are generally more price conscious and often represent a disproportionate number of lower-income and minority students. Policymakers and college administrators must understand the role of financial aid within different contexts to promote college opportunity and degree completion for all students. We often look at financial aid metrics that describe net cost, usually in terms of average net cost for all students or average net cost for all students receiving grant assistance, to better understand the impact of financial aid.  

However, even with so much money from various sources going into gift-assistance for deserving and financially-needy students and so much data on average student unmet need available, many students — especially those who are first-generation, college-going, and historically underrepresented — have misunderstandings about the true net cost of college and continue to think a college degree is unaffordable for them. Maybe that’s because average net cost is far from some individual students’ actual situations. Average student net cost means little to students who have very high or very low family incomes, or very high or very low EFCs. Although we have learned a lot from looking at net cost for students based on total family income ranges, the University of Hawai‘i campuses realize that examining financial aid and net cost in terms of FAFSA EFC ranges might be even more helpful. 

Why EFC Ranges?

A student’s EFC is an indexed measure as a result of the federal methodology formula used in the FAFSA calculation. The EFC (rather than family income alone) represents a family’s financial position regarding its ability to pay for college, and is used by Title IV postsecondary institutions to determine eligibility for federal financial aid. A student’s EFC is often also used by many institutions to award institutional aid. Average net cost determined by EFC ranges makes sense because it takes into account a family’s adjusted gross income, and it takes other important factors into consideration, such as family size. An independent student with a family size of two with an adjusted gross income of $30,000 could have a higher FAFSA-determined EFC than a dependent student in a family of six with two in college and a total family AGI of $80,000. Since aid is generally awarded based on EFCs (rather than family income) and because a student’s EFC takes into account a number of other factors that represent different scenarios for students’ household incomes, why not look at net price in terms of EFC ranges as a measure of affordability?

Impact on Financial Aid Strategies

Incorporating metrics on average net cost by EFC ranges could be very useful to community college leadership, enrollment management staff, and financial aid personnel in making decisions regarding financial aid strategies to encourage enrollment and persistence toward degree completion.  This approach would contribute to data-driven decision-making about effective financial aid awarding practices because this submetric will help to disaggregate students in terms of net cost and do so in a way that is easily convertible into financial aid packaging parameters since that is how most financial aid is awarded. With the assistance of the National Center for Higher Education Management Systems (NCHEMS), the University of Hawai‘i’s Institutional Research & Analysis Office, for example, uses students’ FAFSA EFC in terms of ranges to look at unmet need after scholarships and grants are awarded. Using this information, along with a historical look at the distribution of aid in various need-based financial aid programs, helps financial aid officers identify how to redistribute aid according to which EFC bands of students need more aid to reduce the gap in unmet need. In this way, financial aid can be more strategically distributed quickly and easily since the EFC and ranges of EFC are frequently used in awarding various types of financial aid. Even more could be done regarding leveraging financial aid resources if we had comparisons of unmet need in terms of EFC ranges in state data systems so we could all learn from each other in this area.