I am in a bit of a messy financial situation and, following some good advice on one of the threads on CC, I decided to post here in case any of you might have an idea how farm kids fare in the financial aid process.
I want to apply to liberal arts colleges such as Middlebury and Hamilton and a variety of others similar in price. However, I need financial aid to attend. The guy who manages our finances at the bank–he handles pretty much everything such as my dad’s assets, looks at his taxes, gives dad his input as to whether dad can afford to buy new land or machinery–says that, with dads financial situation, he should have no problem getting aid for me because we took a pretty big loss both last year and this year. Yet, this banker doesn’t know much about colleges and the aid they give so, despite his knowledge of our situation, I don’t think he know much about how this transfers over into financial aid packages–to be honest, I don’t either!
Any advice would be greatly appreciated!
A little more info from the other thread: OP is a junior, so last year’s income isn’t going to be her base year for FA (2015 is). She is looking at pretty much all CSS Profile schools. I don’t know much about how the FA process treats a family farm (just like other small businesses?) or how the OP can get the best idea of whether/how much FA she might expect. But figured some out here might know more.
A farm is treated the same as any other business - both assets and gross income will be taken into account in calculating the student’s financial need (and eligibility for financial aid), and some business deductions will be disallowed.
Bottom line is that it’s impossible to predict how any school will calculate this family’s financial need, and it is likely to vary significantly from one “meets full need” school to another. The student must have a safety net of schools that (1) award merit aid only or (2) are in-state and affordable with state/federal assistance only. I’d suggest using this list of [Automatic Full Tuition & Full Ride Scholarships](http://automaticfulltuition.yolasite.com/) to find at least one guaranteed safety school.
I suggested to her that after this year’s taxes are done, maybe in May or over the summer, that she contact a couple of the schools on her list and ask for an early read on FA given the complexity of her family’s finances. I know this is suggested out here sometimes, but I have not done it, thought others might have some insight into doing that.
Also, the OP has University of Iowa (in-state) as a safety, and might look at some closer LACs (Luther has been suggested, and they have a lower cost than a lot of the schools on her list). But agree that it isn’t clear whether the other schools on her list are workable, and also that her FA may be volatile from year to year depending on how the farm does.
@dogersmom it was suggested to me by someone to ask a college for an early read–do you know of anyone that has done this?
I think @intparent just answered that question. Once the current application cycle is complete (in May) , you can ask any of the schools on your list for an early read. They may or may not agree to do it. But @intparent makes a good point about the volatility of farm income - an early read does not guarantee what your award will be next Spring . . . so you have to have one (or more) affordable safeties that you’re willing to attend. (I’d always suggest having at least two safeties, just so you have a choice.)
Thanks @dodgersmom! I do have at least a few safeties lined up after getting some suggestions from @intparent
@dodgersmom I thought that you do not include the assets of a farm according to the Small Business Exclusion:
With respect to determinations of need under this title, other than for subpart 4 of part A, the term “assets” shall not include the net value of –
A.the family’s principal place of residence; or
B.a family farm on which the family resides.
C.a small business with not more than 100 full-time or full-time equivalent employees (or any part of such a small business) that is owned and controlled by the family.
Good for you, @volleychick13! Unfortunately, we’ve seen far too many cases of families with businesses receiving far less aid than they needed or anticipated. So you need to hope for the best, but prepare for the worst.
And one other thing you need to alert your father to NOW: He will need to have his 2015 tax return completed by January next year. He will likely tell you that that’s impossible, but it doesn’t matter - his 2015 tax return has to be completed by January 2016 whether it’s possible or not! Otherwise, you will be put in the utterly untenable position of having to choose a school without knowing your financial aid awards. It will take a lot of advance planning for him to pull this off, and he may need to file an estimated return first, and amend it later. That’s what many families have to do in order to meet the January/early February deadlines. So, warn your dad about this now - there really is no way around it if you want to be notified of your FA awards in time to make a decision.
If it makes him feel any better, you can tell him that in future years, once you’re attending college, the deadlines will relax a bit.
Wow okay thanks @dodgersmom I’ll make sure to tell him this tonight! Thank you so much for the heads up, I had no clue!
@gearmom - That’s for FAFSA. This student is looking at schools that also require the CSS Profile - and they can do whatever they want! Small farm ownership won’t affect federal or state aid, but it can affect institutional aid.
Okay… I have to insert some reason in here… the tax return isn’t typically due in January, but you definitely need it in February, and some schools want it in mid-February. This is very difficult for anyone with any kind of business (I know because I have had to do it). And even a personal return can be very hard to complete, as many tax forms (like the W-2!) aren’t even received until the end of January. But your dad needs to be on top of this at the end of next year for sure, and he may need to talk to his accountant if he has one to ask to move things along more quickly than usual. The good news is that some schools move the date out a bit for current students after that first year, but freshman applicants are often asked to get their paperwork in very early.
So does anyone have experience with CSS Profile schools and family farms?
@intparent - You’re right, I misspoke. The tax return itself doesn’t generally need to be submitted before the middle or end of February (depending on the school). But the CSS Profile usually needs to be submitted about two weeks earlier than the tax return, so they’ll still need some pretty reliable estimates no later than the end of January.
He may not have all W2’s but should know major numbers, close enough. And then you can revise, when more details come in, which isn’t fun since the CSS is done manually. But doable. The main warning is that some things that are depreciation or deductibles, for IRS purposes, are not, for finaid. Yes, look at each college’s deadlines. We always had the CPA do a draft, by the first deadline. (Don’t own a business, just saying.) And May may be when freshman FA is done but he officers then turn to aid packages for returning students. So your pre-read may not be done til summer. But you can ask these things.
If you haven’t seen it: https://www.niccp.com/document-library/lowering-the-cost/financial-aid/mediaitem/305-2015-2016-profile-business-farm-supplement-form?category_id=162
OP, that is the from that many CSS Profile schools request if your parents own a farm or business. You will want to print that out and show your dad. There will be one dated for 2016-17 that will be the one he actually fills out for your true FA, but he may be asked to do this for an early read. It doesn’t change much at all from year to year, though.
You need to come up with a list of AFFORDABLE schools that do NOT use CSS Profile. There is a parent here whose D got accepted to Yale…a school that gives super aid…but because of the way farms and their assets (pricey equipment) are calculated (both income and VALUE), the D wasn’t given a dime of aid.
You seem to be considering only income, but farms have a LOT of value…land and equipment, so that will likely kill any aid chances at CSS schools.
When you say that you have safeties…what schools are those? You can’t just look at FAFSA EFC and think that you’ll get the rest in aid.
How much will your parents pay each year towards college? Ask them.
What are your safeties and how do you know that they’re affordable??
Thanks @intparent @dodgersmom youve both been very helpful! I’ll inform my father of the situation tonight!
I was pleasantly surprised this year when D’s 1st choice CSS school did not appear to adjust aid based on farm assets. That’s the only package we’ve received so far.
I too would suggest the early read of FA. Farm returns are due 2/28 anyway; give your CPA an alert ahead of time and get ALL the info to them when they need it.
I would suggest doing a year-to-date after harvest/early Dec. You dad may be able to adjust grain sales/deferred payments accordingly. Also may be able to prepay some inputs such as seed/chemicals/fertilizer. I’d flat out ask this summer how each college treats depreciation–usually to the detriment of farmers/small business. Never understood why they back out depreciation if they aren’t then subtracting principal payments. Difficult to farm/run a business without machinery…
