The estimated family contribution (EFC) formula, established by the United States Congress, evaluates financial information entered on a student's Free Application for Federal Student Aid (FAFSA), and thereby determines the estimated contribution from the family for the student's education.
The formula for the estimated family contribution involves looking at potential sources of income and financial support. The elements of the formula include looking at the student's income or assets, if the student is independent, as well as the parent's income and assets, if the student is dependent. The formula also considers the family's household size and the number of people in the household attending school.
The estimated family income includes the sum of the remaining income after living costs and taxes, as well as the percentage of assets. The assessment amounts vary based on whether a student is dependent or independent and if they have any dependents themselves.
The grant amount given through the Federal Pell Grant program is based on the expected family contribution, the cost of attendance at the educational institution, enrollment status (either full or part-time) and the time the student attends. According to the Federal Student Aid website, the maximum Pell Grant award in 2010-2011 is $5,550.
Students with a family income of up to $60,000 can be eligible for a Pell Grant, however, most recipients of Pell Grants have an income less than $30,000. In order to receive a grant, students must be U.S. citizens, permanent residents or eligible non-citizens, and have a high school diploma, GED or show ability to benefit from a program.
When the Pell Grant calculation is complete and the student is enrolled, the financial disbursement may either be paid through the student's school account, directly to the student or combination of the two. Pell Grants are paid once per term based on how the school operates, such as semesters, quarters or trimesters.