waitingforcal

I'm in this boat now, as a rising senior.
For me, the hard part is that I am white and my parents own and run three businesses. We easily gross $350,000 a year. Sounds pretty good. But our family's net income is just about $50,000. Not enough to easily send me to college with my sister just a couple years behind me.
How much financial aid is out there for the children of business owners? I haven't found much. And why is it that when I filled out the FAFSA4caster, it seemed that all the government cared about was our gross income?

sewhappy

I think the issue is becoming more important as the economic slump deepens and more parents find themselves with perhaps good current incomes but greater and greater insecurity for maintaining that income. Makes it awfully hard to keep shelling out full-pay for kids at college no matter how easy the colleges this it is for us.

AidAdvisor

Eligibility for an independent status has nothing to do with whether or not parents should pay, etc. it is simply the way the aid system is set up. A student is required to provide parent asset/income unless one or more of the followin apply:

•You are at least 24 years old on the day you file your FAFSA (I will modify this to be 24 in the year you file your FAFSA)
•You are or will be enrolled in a masters or Doctoral degree program at the beginning of the school year
•You are married on the day you file your FAFSA
•You are a parent
•You have dependents other than your spouse who live with you and who receive more than half their support from you at the time you apply
•Both your parents are deceased (or were until age 18) a ward of dependent of the court
•You are currently serving on active duty in the U.S. Armed Forces for purposes other than training
•You’re a Veteran of the U.S. Armed Forces.
•You were a foster child after the age of 13.
•You are an emancipated child as determined by a court judge.
•You are homeless or at risk of homelessness as determined by the director of a HUD approved homeless shelter, transitional program, or high school liaison

If none of these apply, then you are a dependent student

AidAdvisor

The good news is any business that is family owned and controlled is exempt as an asset. This was a recent development in assessing need. So don't worry about that!

R124687

Whoa. I hope that "family owned" biz ends up applying to me! I have an S Corp business. So all profit is considered income by the government and subject to income tax. So..while it "appears" I make money...I pay nearly all of it back in taxes. I haven't filled out a FAFSA for yet, so I'm sure it is complex enough to take into consideration most situations. I'm still nervous.

AidAdvisor

Well, we're talking assets here. Business assets exempt if family owned/controlled and less than 100 employees. Income is still income, though and assessed at up to 47% depending on amount. Whatever you take needs to be reported, however there are a lot of income-shifting strategies to increase eligibility for aid.

swimcatsmom

There is some new thing this year where if a parent refuses to file FAFSA you can file and be eligible for Stafford loans at least. But you would not be eligible for the grants such as the Pell grant. They have to sign something saying they refuse to file FAFSA and are not supporting you financially. Kelsmom had a post about it, I will see if I can find it.

Here it is
What can a kid do when their parent will NOT fill out a FAFSA?

posts #6 and #9 by Nikkil and Kelsmom. It enables the student to file FAFSA without parent input and makes them able to get loans, but does not make the student eligible for federal grants.

tokenadult

That's one way of looking at the matter. And then if you are willing to pay full list price for the college out of your own pocket, you are fine. Some students do that by working while in school and taking loans that they repay after graduation.

If you would like to have taxpayer-funded financial aid for your higher education, please know that the law is that your parents have a HIGHER obligation to pay for their children's undergraduate education than does any random taxpayer whom you have never met. If you fulfill the requirements for independent status, the law is that you can get in line to apply for taxpayer-funded financial aid just like everyone else. If you don't meet the requirements for independent status, your parents are first in line to help you pay, BEFORE the taxpaying public in general. If you pay for everything all by yourself, you have my congratulations. If your parents help you pay, they have my congratulations. Just don't expect taxpayers to pay for your higher education unless you meet the usual rules for independent status.

Good luck in your studies.

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anony33

Or we could just function like the rest of the Western world and each taxpayer can have an equal obligation to fund education, a social service...However, this is America and things will remain backwards for years to come. If you're born to a careless parent, the government feels it must make your life slightly more difficult than it already is.

2bizee

When I went to a private medical school over 20 years ago I was 25 and married and had been supporting myself and my (student) husband for several years, but I had to include my parents financials.

They've got the ball and they can decide if you can play.

anony33

Does the US even offer grant aid for professional schools? I don't think it would've mattered whether your parents were included or not. However, here's one way to avoid spending the $200 grand you ended up spending:

My dad went to med school in Belgium for $10/class due to their generous aid, AND he was a foreigner.

sewhappy

TokenAdult,

Your post is a good description of the current approach for "tax-funded FA". But that's just the status quo. The real question is whether or not the status quo is valid.

An eighteen-year-old is an adult with parents who are not legally responsible for him/her in the eyes of our law - except when it comes to paying for college. This is hypocritical and leads to lots of dysfunctional economic consequences - exorbitant college cost inflation, debt levels among aging workers - including widespread tapping into home equite debt, and finally an unhealthy psychology between parent and child at the life juncture when the child should be breaking free of, not becoming increasingly dependent upon, the parent.

If parental income was not considered in setting a price of attendance, college tuition levels would be drastically lower. Allowing colleges to essentiall raid the parents' finances just drives upward the cost to attend.

That's the nature of subsidies.

tokenadult

I largely agree on the nature of subsidies, and I have great sympathy for young people whose parents don't step up to pay for college. But economists of education, looking around the world, have noticed that college access is greatest in countries with a mixed system (like the United States) of some publicly subsidized colleges with low list price (such as a typical state university), some private colleges with a high list price, and both government and students' families paying for college. That gets the most students in college across the broadest range of family income levels.

sewhappy

^ hmmmm . . . I buy that. Kind of like our current health care system - a big mix. Okay, maybe time to get off my high horse and make peace with the truly ridiculous check I need to write.

comiclover

I'm mad at my parents. My dad makes over 120k and is about to get a better job. My tuition is only 1k a semester thanks to me getting myself more fin aid and they still won't help me out. Also, I just found out that my dad just bought a new car. =/