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Understanding your financial aid options is one of the most challenging steps for students and families when applying to colleges. For most, this process begins by applying for federal financial aid through the Free Application for Federal Student Aid (FAFSA®).  The FAFSA has included the Expected Family Contribution (EFC) for many years. This metric indicates the financial strength of a prospective student and their family and is used to help determine how much financial aid the student is eligible to receive.  As of 2023, the EFC was replaced by the Student Aid Index, or SAI. The SAI was introduced as part of a larger series of changes designed to improve the FAFSA and the financial aid process overall. The SAI was specifically developed to eliminate some of the confusion regarding the EFC and to improve the calculation to more accurately identify students who are truly in most need of aid. This article will examine the differences between EFC vs. SAI and their role in applying for federal financial aid through the FAFSA. Key Takeaways The Student Aid Index (SAI) replaced Expected Family Contribution (EFC) beginning with the 2024-2025 FAFSA application cycle.  SAI was introduced as part of the FAFSA Simplification Act in 2020 to make financial aid easier to understand for students and their families. While SAI and EFC both measure a student’s financial need, they are not the same. Under SAI, small-business and family-farm assets are counted rather than excluded, and the number of students in college at the same time is no longer factored in—both of which were part of the EFC calculation. The main advantage of the SAI over the EFC is that it requires less information from families, making the FAFSA process easier and more straightforward. What is Expected Family Contribution (EFC)? The EFC, or Expected Family Contribution, was previously used in the FAFSA application process to indicate a student and family’s financial strength. Prior to being replaced by the SAI, the EFC was used by colleges and financial aid offices to help determine financial aid eligibility.  While its name has been changed, its function in the financial aid application process is the same. The EFC is an index used to compare a student’s financial needs against those of other students. The calculation is based on the financial information provided in the FAFSA and includes factors such as family income, family assets, family size, and other criteria. The EFC is not a dollar amount nor a reflection of the amount a family will be required to contribute toward tuition. It’s used by colleges and universities to compare students’ financial needs in relation to one another. A lower EFC correlates to greater financial need and eligibility for aid, while a higher EFC correlates to lower financial need and financial aid eligibility.  What is the Student Aid Index (SAI)? Similar to the EFC (which it has now replaced), the SAI is a number the federal government provides after the FAFSA is submitted. This number is then used to help colleges and financial aid offices determine a student’s eligibility for federal financial aid. Like its predecessor, the SAI is calculated based on information provided in the FAFSA, including the income, assets, taxes, and demographics of the prospective student and their family. The SAI is not a dollar amount, and it does not represent the amount the student or their family must contribute. Instead, the SAI categorizes and compares students' financial abilities and needs. How Student Aid Index is replacing Expected Family Contribution In December 2020, the United States Congress passed the FAFSA Simplification Act, which mandated many changes to federal financial aid programs. For example, the act greatly simplified the FAFSA form, which will now be several dozen questions instead of over 100, and expanded eligibility for Pell Grants. One of the biggest changes the act mandates is the replacement of the EFC with the SAI. The FAFSA Simplification Act set deadlines for when different portions of the act were to go into effect. The initial change from the EFC to the SAI took place in 2023. Schools must switch from using the EFC to the SAI by the 2024-2025 award year when EFC will be discontinued entirely. The application process will be very similar for most students. Prospective students will apply for the newly modified FAFSA using the new form. The government will then provide them with their SAI in the same manner that they provided the EFC. [cross_promotion_banner] Student Aid Index vs. EFC: Key Differences The Student Aid Index was designed to provide more clarity around the meaning of the EFC, but not to completely change its function in the FAFSA process. In fact, the SAI is very similar to the EFC and is calculated almost identically. However, there are some key differences between EFC and SAI. Name Change – The term ‘Estimated Family Contribution’ was confusing in the FAFSA process, as many families assumed it was the estimated amount the family would be required to contribute. The Student Aid Index is less confusing and accurately reflects the number used. Elimination of the Small Business Exclusion – The EFC included a Small Business Exclusion, which allowed families to exclude certain small business assets from the assets reported on the FAFSA. The SAI no longer allows this exclusion. Modification of the Family Farm Exclusion – The EFC contained the family farm exclusion, allowing families to exclude certain family farm assets from the assets reported on the FAFSA. The SAI does not allow for this exclusion, but in some circumstances, the net worth of the family farm can still be excluded as an asset. Allowing of Negative Numbers – The EFC did not allow negative numbers. Instead, the lowest possible EFC was 0. The SAI does allow for negative results. The lowest possible EFC is -1,500. Elimination of Counting Children Currently in College – The EFC allowed parents to consider how many children they had in college. At one point in the calculation, the EFC allowed parents to divide by the number of children in college that they had. The SAI has entirely eliminated the number of students a parent currently has in college from the calculations. This is likely the most significant change for many families. There are also a number of benefits of the SAI vs. the EFC. Some of the most important include: Simplified Calculation – The SAI’s formula is simpler than the EFC, with fewer possible exclusions and steps. This makes it easier for families to understand and can reduce opportunities for misinterpretation. Increased Accuracy – Because there are fewer exclusions and steps to the SAI calculations, families have fewer opportunities to make mistakes about what can and should be included and what can’t and shouldn’t. Perhaps most importantly, the SAI results more accurately represent which students are truly in most need of aid. Easy Input – The SAI requires families to input less information. This makes the process easier, faster, and less likely to result in confusion or mistakes. Reduced Confusion – The EFC caused confusion because many people thought it was the amount the family would pay. The SAI eliminates this confusion, and more accurately represents its intended purpose. EFC vs. SAI: Adapting to changes in financial aid calculation If you’ve never applied for financial aid before, transitioning from the SAI to the EFC will not impact your FAFSA application process. It will impact only the terminology you see on your Student Aid Report (SAR), which you will receive after your FAFSA is submitted and processed. The biggest difference is that your SAI number is less likely to confuse you and more likely to accurately reflect your financial needs. Due to the modifications in how the SAI is calculated, some scenarios exist in which students may be eligible for less financial aid using the new SAI vs. the EFC. This is especially true for families with multiple children currently enrolled in college and those with small business or family farm assets. Learn more about SAI vs. EFC with Ascent Ascent is determined to support students in achieving their financial goals to succeed in college and beyond. Whether you’re looking to get ahead of FAFSA deadlines or are ready for a deep dive into FAFSA 101, we have the resources to help you navigate the college application process from start to finish.  If your federal aid isn’t enough to fully cover your expenses, Ascent offers cosigned student loans and non-cosigned student loans to meet your unique needs. Check your rates today without impacting your credit score or contact us for more information. FAQs What Is replacing EFC? The SAI is replacing the EFC effective in the 2024-2025 award year, although it’s probably more accurate to say that the SAI is modifying and improving the EFC. EFC and SAI serve the same purpose in the federal financial aid process: to help the government and educational institutions determine which students most need financial aid. The SAI has refined the calculation and adjusted the verbiage to accurately reflect its purpose. Is EFC the same as SAI? The Expected Family Contribution (EFC) is not the same thing as the Student Aid Index (SAI). While the two are very similar, the SAI was introduced to replace the EFC, and there are a few key differences between the two. The SAI is calculated slightly differently from the EFC, especially regarding what families can exclude as assets and if families can consider the number of children they currently have in college. These changes make the SAI a more accurate reflection of which students actually have the greatest need for financial aid. The SAI has also been rebranded to eliminate confusion caused by the EFC. These differences will be minimal for most families, and their EFC and SAI will similarly impact what financial aid is available. Is EFC going away? The EFC will be retired in 2023. Beginning in the 2024-2025 school year, the federal government and schools that accept federal aid must fully replace the EFC with the SAI. Although the SAI is replacing and modifying the EFC, the two calculations are very similar, and the results will be very similar for most families. In fact, much of the EFC is included within the SAI, although some parts have been moderately changed.

Embarking on your college journey is an exciting new adventure, filled with the promise of new experiences, personal growth, and endless opportunities. But for many students, the looming shadow of tuition fees and associated costs can put a damper on this new chapter of life. This is where tuition payment plans may help provide some relief.   Tuition payment plans, sometimes called college payment plans, are designed to break down a single tuition bill into smaller, more manageable payments. This can help you budget more effectively and make the financial weight of tuition payments feel less overwhelming.   In this guide, we'll dive deep into tuition payment plans to help you make informed financial decisions about funding your education.  Do Colleges have Payment Plans? Just like undergraduate and graduate loans, tuition payment plans are programs to ease the financial burden of higher education. These plans can act as a financial bridge for students and their families, providing an alternative to the traditional lump-sum payment method.   Payment plans for college are offered by many educational institutions. In short, these plans break down tuition bills into smaller increments, which can be a big help when budgeting for the school year. By spreading payments over time, they may help relieve some of the financial strain that a semester of tuition can impose.  The concept of a tuition payment plan is like an installment plan, which is commonly offered for major life purchases, such as furniture or cell phones. Tuition payment plans, however, are specifically crafted with a student's academic calendar and financial needs in mind.  How does a tuition payment plan work? When you opt for a tuition payment plan, you enter into an agreement with your college or university. The agreement outlines the frequency and the amount of each installment. Depending on the institution and the specific plan, these installments may be monthly, quarterly, or by academic semester.   Many tuition payment plans are interest-free, but some might have small fees or interest attached. This is especially common if the payment period extends beyond the academic year. It's important to familiarize yourself with the details of the plan to help you avoid—or at least anticipate— potential late fees or penalties.  What costs do tuition installment plans cover? Tuition installment plans are designed to address primary academic expenses. These expenses often apply to the tuition itself, as well as other institution-mandated charges like lab fees or technology fees. Some plans may extend to cover room and board if you live on campus, which can further reduce your monthly expenses.   It’s important to note that these plans usually don't extend to more variable expenses. This includes items like textbooks, personal supplies, and off-campus living costs. Check out our checklist to pay for college for important tips and resources that can help you plan for your total expected expenses.   Navigating different types of tuition payment plans Whether you receive a monthly allowance, work part-time, or expect a lump sum payment or gift later in the year, most colleges offer plans to help you budget for college. Here’s a look at two of the most popular plans available today:  Monthly installment plans For many students and families, managing large expenses can be daunting. Monthly installment plans offer a solution by breaking down your tuition bill into smaller, more manageable payments. Distributing the cost over several months may better align with the month-to-month budgeting habits of many households. This plan can be particularly beneficial if you receive a steady monthly income, ensuring college expenses stay consistent with their financial flow.  Features:  Splits the total tuition cost into equal monthly payments.  Offers predictability for those who track to a monthly budget.   May not require interest, but there might be a small administrative fee.  Ideal For: Students and families with a consistent monthly income or prefer regular, smaller payments.  Deferred payment plans Not everyone funds their college expenses with a regular monthly income. This is one reason some colleges offer deferred payment plans. This option benefits students utilizing non-recurring funds, such as scholarships, grants, or even personal savings, to cover tuition expenses.   Certain types of funding are often received later in the academic year, and deferring a portion of the tuition allows for coordination between payment timing and incoming finances. Aligning these schedules can help students cover their educational costs without undue stress.  Features:  Allows students to defer a significant portion of their tuition.  Payments are made after the semester concludes.  May come with interest or a higher administrative fee.  Ideal For: Students who expect to receive funds later in the academic year or have irregular income patterns.  Advantages and drawbacks of tuition payment plans Understanding the pros and cons of tuition payment plans can empower students and their families to make informed decisions that align with their financial situations and goals. Here’s a look at the pros and cons.  Pros Enables Manageable Payments Over Time: Tuition payment plans break down the hefty sum of tuition fees into smaller, more manageable payments. For instance, instead of paying $12,000 upfront for a semester, a student might pay $2,000 every month for six months. This structured approach can make budgeting easier and help reduce financial strain.  Reduces the Need for Extensive Loans: By opting for a tuition payment plan, students might find they need to borrow less or not at all. For example, a student might only need a loan for half the tuition amount if they can establish a payment plan for the remainder. This can help reduce the future debt they take on through student loans.  Often Interest-Free, Making It Cost-Effective: Many tuition payment plans are interest-free, which can result in significant savings over time. Let’s take a student who might otherwise take out a loan with a 5% interest rate. An interest-free payment plan could save hundreds or even thousands of dollars in interest throughout their education.  Cons Not All Colleges Offer Them: While tuition payment plans are becoming more common, only some institutions offer them. A student might find their dream college, only to discover that such a payment option isn't available. This could complicate financial planning.  Some Might Charge Setup or Late Fees: While the plan itself might be interest-free, there may be other costs. This is why reading the fine print before entering into any financial agreement is important. For instance, a college might charge a $50 setup fee, or late fees for missed payments. These fees can add up over time and cause financial strain, especially if the fees are unexpected.  Doesn't Cover All College Expenses: A tuition payment plan may cover your primary academic costs, but what about textbooks, off-campus housing, or personal expenses? Relying solely on a payment may leave you short when it comes to these other essential costs.   How to secure your tuition payment plan A good starting point to secure a tuition payment plan is calling your college's financial office or visiting their website. These platforms typically provide comprehensive information about available payment plans, including explaining the terms and conditions. Familiarize yourself with the application process, which usually involves filling out forms and providing financial documentation.   Some colleges may have strict eligibility criteria to qualify for a tuition payment plan, such as maintaining a certain GPA or enrolling in a specific number of credit hours. Be sure to familiarize yourself with any requirements before applying.  Remember that while tuition payment plans can help you more effectively manage your expenses, they may come with associated fees. Some colleges may charge a setup fee, while others might levy charges for late payments or modifications to the plan. Be aware of these potential costs upfront to avoid any unexpected surprises.  Lastly, a pro tip for prospective enrollees: start your planning and applications early.   Colleges often have deadlines for enrollment in these plans which can lead to missed opportunities. Early enrollment not only ensures you secure your preferred plan but also gives you ample time to adjust your budget and financial commitments accordingly. This can help eliminate last-minute scrambles and stress.  Tips on making the most of your tuition payment plan While a tuition payment plan can help you better manage your finances, it is not a set-it-and-forget-it solution. Proactive planning and discipline are necessary if you want to really benefit from a payment plan.   Here are some strategies that can help you make the most of your tuition payment plan:  Budget Effectively: A well-structured budget is the backbone of a successful financial plan. Once enrolled, proactively setting aside funds for upcoming installments can help set you up for success once your next payment is due. These reserves could come from a portion of your monthly income or a savings account set aside specifically for this purpose. Familiarize yourself with budgeting hacks like the 50/30/20 rule, which can help establish a structured plan.  Video Embed opportunity: https://youtu.be/fEp8cfM5rw4  Leverage Online Tools: The digital age has introduced a variety of useful tools designed to make financial management more accessible. Many colleges and universities offer online platforms where you can track, manage, and even modify your payment plan. These platforms often provide real-time updates on due dates, remaining balances, and payment histories. Some might even offer alerts or reminders, ensuring you're always in the loop about upcoming payments.  Automate Payments: Automating the process is one of the most effective ways to ensure timely payments. Most financial institutions and college payment platforms allow for automatic scheduled payments. If you have the funds ready, using this feature can eliminate the risk of forgetting a payment.   While automation can be a lifesaver, ensuring your linked account has sufficient funds is crucial to avoid overdraft fees. It is also good practice to periodically review your tuition statements to confirm the correct amounts are being deducted.  By budgeting effectively, leveraging available tools, and automating payments, you can make the most of your tuition payment plan without additional stress.  Learn more with Ascent Ascent is more than just a financial institution; we're a partner in your educational journey. Whether you are looking for budgeting hacks or tips on paying for college, we have the resources to help you make informed decisions.  Learn more about our student loans or view our financial wellness resources for more student success tips.  FAQ's Are tuition payment plans available at all colleges and universities? Tuition payment plans have become increasingly popular as a flexible financial solution for students, and many colleges and universities now offer them as an option. However, it's not a universal offering. The availability of these plans often depends on the institution's size, financial policies, and the demand from the student body. Can I use a tuition payment plan for both tuition and other college expenses? Tuition payment plans are primarily designed to help students manage the significant costs of tuition. Most plans will cover tuition and other mandatory fees associated with enrollment. In some cases, colleges might extend the plan to cover room and board, especially if housing is provided by the institution.   Remember that discretionary expenses, such as textbooks, off-campus housing, or personal expenses, are typically not included. Getting a clear breakdown of what's covered under your plan is essential to avoid unexpected out-of-pocket expenses during the academic year.  How does using a tuition payment plan affect my credit score? At their core, tuition payment plans are not credit agreements, so enrolling in one won't directly impact your credit score. However, the nuances come into play if the college or university involves a third-party lender or if there's a contractual agreement to pay. Missing payments or defaulting on your agreement can lead to negative reports to credit bureaus, which could adversely affect your credit score.   Treating your tuition payment plan with the same financial responsibility as any other financial commitment is essential. Staying informed and making timely payments will ensure your credit remains unaffected while you pursue your education. 

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Ascent hosted an engaging webinar to address what’s on many people’s minds - federal student loan repayment. We know that embarking on this journey can be overwhelming and you're not alone. According to NerdWallet, “nearly 44 million borrowers with student loans” are entering repayment. We're committed to supporting individuals every step of the way.  Our recent webinar, 'Federal Student Loan Repayment De-Mystified,' covered several topics ranging from how to prepare for repayment to understanding your repayment plan and exploring the invaluable resources available for those making budget adjustments.  We want to offer resources and address some important audience questions we didn’t have time to cover and provide guidance and support on this complex topic.  There are some great options for student loan repayment. What are the potential downsides to an Income Driven Repayment plan (IDR)?  Income Driven Repayment (IDR) plans may be a good option for students that are unable to make their required payments under a standard, graduated or extended repayment plan, have low income or are enrolled in the Public Service Loan Forgiveness program, among other reasons. However, it is not always the best option for all students. Some of the disadvantages of IDR's include:    You might not qualify for a lower payment than under a standard repayment plan  Depending on which IDR plan, loan balances may increase as well as total cost of the loan due to unpaid interest  It will generally take longer to fully repay the debt obligation  Monthly payments may increase as your income increases  There may be tax consequences for forgiven loan balances, and you may want to consult a tax professional  What if my monthly payment is too high? How can I reduce this to a manageable amount?  According to StudentAid.gov, “Most federal student loans are eligible for at least one income-driven repayment plan. If your income is low enough, your payment could be as low as $0 per month.”  Start by exploring the new SAVE plan and use the Loan Simulator. This tool will help you explore repayment options that fit your needs.  You can also reach out to your Loan Servicer to explore options for reducing your monthly payment.   To find your Loan Servicer: Log into StudentAid.gov, view your Dashboard and access their information on the right-hand side panel.  What is PSLF and how can I qualify?  The Public Service Loan Forgiveness is a program for individuals employed by a government or non-profit organization that forgives the remaining balance on your direct loans:  If you are working full time for an eligible employer  After you’ve made the equivalent of 120 qualifying monthly payments under an accepted repayment plan  The PSLF Help Tool is a great place to start and will help you:  Search for qualifying employers  List what actions you may need to take to become eligible   Generate a PSLF form (tip: You must complete the form in a single session)  Need more info? Check out this helpful FAQ about PSLF  What types of student loan repayment options are there for Parent Plus Loans?  Parent PLUS borrowers are eligible for the following repayment plans:  Standard Repayment Plan  Graduated Repayment Plan  Extended Repayment Plan  According to StudentAid.gov, “Parent borrowers can become eligible for an additional repayment plan—the Income-Contingent Repayment Plan—by consolidating their parent PLUS loans into a Direct Consolidation Loan.”  If you have concerns about making payments, reach out to your Loan Servicer to discuss your options.   Need more info? Check out these Parent Plus FAQs  The conversation is far from over The conversation is far from over. It's ever evolving, and we recognize the importance of this topic for enrolled and unenrolled students, graduates and cosigners. We're dedicated to delving deeper and bringing more insights, advice, and conversations in the coming weeks.  Stay tuned and keep sharing your questions, concerns, and personal experiences as it helps shape these discussions and strengthens our Ascent community.  

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Congratulations to Harsimran Sandhu, our $10,000 Pursue Your Dream Contest winner! We asked students to share their ambitions in a 30-90 second video and explain how they plan to use the money to reach their dreams.

College has been some of the best few years of my life and I've learned a lot along the way working toward my own success.