real estate

Paying for College
1

<p>This is a question for a friend, and I apologise for not knowing all the details. Her dad is very worried about the cost of college, and thinks they won’t qualify for much aid. He makes around 30K per year, sometimes a little more, my friend has one younger brother, and her mom doesn’t work. Her dad is self employed as a real estate agent, and owns a lot of property because of that–I guess the properties are in his name while he is trying to sell them, and he has some that he is doing restoration work on before reselling. They don’t have much savings or anything. The main question is how this real estate would count for financial aid.</p>

2

<p>Hi Cynthia,</p>

<p>Real estate is considered an asset at schools that use the CSS profile. The equity on the properties as well as any rental income received from the properties will be considered when calculated financial aid.</p>

3

<p>Cynthia, someone is not leveling with you. Real estate agents don’t just usually own a lot of land nor is property they are trying to sell in their name. Owning land is the biggest asset for most and does need to be claimed for schools requiring the profile.</p>

4

<p>now I have friends who are living on a small income
Wife- works selling real estate- I don’t know how much she makes- not much I imagine as she started less than a year ago and she has a 2 yr old baby.
Husband works as managing a duplex that they own- which is probably moderate income- it is in a lower end neighborhood- of course they would also have the mortgage as well. so the income from rent of the duplex and the real estate sales are what they live on.
They also own a huge house that they are fixing up to sell. It is in a “depressed” neighborhood that is coming back. They have been working on it pretty steadily for about 3 years- they had to take it down to the studs and floor joists- it hadn’t been lived in for quite a while.
So that isn’t bringing in any income- but it is an expense.
They actually were living in one floor of it while they fixed it up, but finally found another place to move to when their baby started to become more mobile.
So while they own three properties and all the expenses connected with those properties ( mortgage repairs etc)- the income is only from rent on the duplex and from the real estate liscence.
Luckily their daughter has a few years before college- so hopefully the mansion will be done and sold by then :)</p>

5

<p>You indicate that your friend’s father’s income is around $30K. I assume that number is what’s listed on his 1040 on the line adjusted gross income (AGI). </p>

<p>A family’s EFC (expected family contribution) is a sum of a percentage of four factors: parent’s income, student’s income, parent’s assets, student’s assets. Under the federal methodology, if the parent’s income (AGI) is beneath $50K and the parents file a short form (1040A or 1040EZ), then two of the above factors (parents assets and student assets) will be excluded when your friend’s EFC is determined. See
<a href=“http://www.finaid.org/educators/needs.phtml[/url]”>http://www.finaid.org/educators/needs.phtml&lt;/a&gt;&lt;/p&gt;

<p>So if your friend applies to schools that only use the federal methodology (FAFSA), the real estate will be excluded if the parent’s income is beneath $50K and the parents (and your friend) file short 1040’s. On the other hand, if your friend applies to schools that use institutional methodology (PROFILE) then the real estate will be treated as an asset and used by the schools when your friend’s family’s EFC is calculated.</p>

6

<p>i know from my experience with USC, that my family’s real estate assets were accounted for when calculating my EFC. I ended up not getting a penny of financial aid when USC has one of the best aid programs in the country. It sucks</p>

7

<p>As USC requires the PROFILE, family real estate assets are used.</p>