I don't favor reducing the E.F.C. if it means increasing federal loans and grants, because government subsidies are a cause of rising college prices. Maybe the calculation of need used to determine eligibility for grants and loans should be done as if no college costs more than $30K per year for tuition, room, and board. Colleges could charge more, but students and parents would not be eligible for more federal loans and grants because they were charging more.

http://www.nytimes.com/2014/03/21/opinion/a-quick-way-to-cut-college-costs.html
A Quick Way to Cut College Costs
By STEVE COHEN
New York Times
MARCH 20, 2014

...

Consider a family of four, earning $100,000 in income and having $50,000 in savings. The [Expected Family Contribution] says that this family will contribute $17,375 each year to a child’s college expenses. A $100,000 income translates into take-home pay of about $6,311 monthly. An E.F.C. of $17,375 means the family must contribute about $1,500 a month — every month for four years. But cutting family expenses by 25 percent every month is unrealistic.

Alternatively, the family could use its savings. But that would deplete their $50,000 before the start of the child’s senior year, leaving nothing for the proverbial rainy day, or for the second child’s education.

...

Since Congress controls the E.F.C. formula, it makes sense for political leaders who are serious about controlling college costs and student debt to start by making the E.F.C. more realistic. But tinkering with the E.F.C. formula won’t be sufficient because there are so many problems with it. For example, it doesn’t take into consideration geographic differences in cost-of-living, or the lack of liquidity in one’s home.

So let’s get serious instead. Congress and the president should drastically cut the E.F.C. — by around 75 percent, to reflect the fact that since 1980 tuition has risen at nearly five times the rate of the Consumer Price Index. Doing so would force colleges to construct financial aid packages without the artificial price supports of inflated contribution numbers — and make paying for college less agonizing.