Expected family contribution (EFC) is calculated according to federal government formulas from a family's Free Application for Federal Student Aid (FAFSA). The EFC is the amount of money that the federal government assumes a student and his or her family are able and willing to pay for higher education during one year. Running up credit card debt will not lower the EFC, because credit card debt is not in the calculation. Interestingly, a home equity loan may produce a double backfire. Any unspent cash proceeds will increase the EFC, and, depending on the school, reduced home equity may not reduce the EFC. Meanwhile, the debt incurred may result in lessening the ability to borrow in the future.
 

Brian C. Greenberg is a Marlton, New Jersey CPA and certified college planning specialist. He hosts the television show "College Bound."