The bottom line that students and parents consider is net price, which the student and parents may cover with a mix of parent contribution, student contribution (student loan and student work), and whatever else they find, regardless of how the school divides it between EFC, ESC, and (if any) unmet need.
However, if “whatever else they find” includes outside scholarships, how the net price is divided between these categories does matter, if the school has the common policy of first applying outside scholarships to ESC and (if any) unmet need, but then reduces grants before reducing EFC.
For example, consider two schools where the list price is $60,000 but give grants of $25,000 for a net price of $35,000.
School A:
EFC = $30,000
ESC = $5,000
unmet need = $0
School B:
EFC = $20,000
ESC = $10,000
unmet need = $5,000
At school A, the student can earn up to $5,000 of outside scholarships before they reduce grants from school A. After that, the outside scholarships will need to exceed $30,000 to further reduce the price.
But at school B, the student can earn up to $15,000 of outside scholarships before they reduce grants from school B. After that, the outside scholarships will need to exceed $40,000 to further reduce the price.