<p>Could a rich parent snare $160,000 or more in financial aid from a private college by the following method: Could a parent who is the sole owner of an incorporated business pay himself little starting in the year that his child applies to a school and for several years thereafter and withhold the distribution of dividends until the child is out of college and then slowly release the withheld dividends in order to escape attention and the ATM. Are there protections in the FAFSA and other calculations that would stop a parent from manipulating the system so that a rich parent can not divert funds meant for poorer families? I don’t have a child of college admission age and don’t know if such safeguards exist. Could anyone explain? Thanks</p>
<p>This idea confirms that some rich people are crafty and greedy and that is how they get rich. In my opinion, if you are rich, you should think of giving instead grabbing. </p>
<p>Unfortunately I do not have money to give. But I do give my time to my community. I still consider myself lucky that I have a job while some do not.</p>
<p>The institutional method (the financial aid data that the most selective schools gather besides the information required for FAFSA) is designed to detect some situations like that.</p>
<p>I am not an expert on financial aid, but I do know that the calculations consider assets and income. I would expect that the asset data would discover the situation in the form of the value of the business owned.</p>
<p>I agree with the above. The Collegeboard CSS form required by HYPS would disclose most any elusion created by such a ploy. It requires disclosure of business income, farm income, real estate issues etc. They’re actually pretty thorough.</p>
<p>Of course, if this hypothetical person is quite willing to steal financial aid money from poor families, then is probably also willing to falsify statements of the worth of the business, submit bogus tax returns, and whatever else is needed to cheat the system.</p>
<p>Yes, but couldn’t the small business owner have gotten his ownership interest from his own alive and kicking parents? Almost certainly, the stock change would have been recorded only in his own office thereby enabling him to declare his small salary and his large mortgage and send in his most recent 1040 as substantiation. He could choose not to fill out the business owner worksheet of the calculations. Who would know the difference? Besides, why should he feel bad about it? The parent who own parents were vastly richer than this guy’s parents can just put the money on the counter for their child. Who loses? The truly poor kid and the kid who can not even apply because he has a rich parent who doesn’t care to help. I am not sure that vast financial aid from elite private colleges is leveling the playing field all that much. Some, yes, but enough? I wonder if these schools search out the really poor kids with as much effort as some of them spend on finding fine athletes. And the kid with the truly uncaring rich parent or (even) parents doesn’t have a chance; if he or she can’t get merit aid, that student will go into debt or get a job after high school.</p>
<p>So how can a rich school find a truly poor kid or even a relatively poor one? How about having a requirement that the entering student must sign over all present and future inheritance rights to the generous school for use by future poor kids?</p>
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<p>Are you being serious??</p>
<p>For college financial aid people, small salary + large mortgage = ALERT!! </p>
<p>Financial aid people are not limited to asking questions found on the FAFSA and Profile. If they suspect something is amiss, they can - and will - ask questions and require additional documentation. I attended a presentation by the head financial aid person at a private college a few months ago. He said his school requests additional information on fully 30% of their aid applications.</p>
<p>Yes, I am serious. A poor student would jump at signing away inheritances rather than waiting for his parent to win a lottery. The child of single mother and a rich father who doesn’t care would realize that if Pop doesn’t come through for college, he isn’t going to come through later. Who cares how much the half and step siblings get? I’d really like some of you to think about the idea, but there isn’t much traffic on this thread (not to mention the typo gaff in the thread title). I’m new; do any of you know how to beat the bushes?</p>
<p><<<< This idea confirms that some rich people are crafty and greedy and that is how they get rich. >>></p>
<p>That is an unfair stereotype. There are dishonest people at all income levels who try to “get more” or cheat.</p>
<p>Most rich people do NOT get rich by dishonest methods. Most rich get rich by great ideas and hard work. AND, most schools wouldn’t have the foundations that they do if it weren’t for rich people donating huge amounts of money to them. </p>
<p>As for the OP: That “idea” was tried by an auto dealer. FAFSA smelled a rat and the jig was up. I am sure others have tried similar “schemes” – some probably win but many probably lose.</p>
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<p>Different colleges handle the non-paying non-custodial parent issue differently. Most consider that if parents can pay, they should pay. Financial aid should be set aside for students whose families cannot pay as opposed to do not wish to pay. However, when a divorced parent refuses to pay, some colleges may sympathize and award some financial aid, others refuse. I remember reading on CC that Boston College refused to “let a father off the hook” out of principle; as a Catholic institution, BC frowns on divorce to begin with. The practical conseqeuence , however, fell on his child who was not able to attend BC. Nonetheless, the student did get financial aid from a different college which was willing to take into account the unwillingness of the father to pay. In these cases, I believe some paperwork is required.</p>
<p>See this link for as much detail as you might want to know: </p>
<p><a href=“College Board - SAT, AP, College Search and Admission Tools”>College Board - SAT, AP, College Search and Admission Tools; </p>
<p>You might also want to look at </p>
<p><a href=“http://568group.org/[/url]”>http://568group.org/</a> </p>
<p>for more background on the financial aid policies of several of the schools mentioned in this thread.</p>
<p>Tokenadult: Thank you very much; I would not have found these links on my own.</p>
<p>Marite: I agree with you that the onus should not fall on the student when a parent is at fault. If only all schools, elite or otherwise, could be free, as they more or less are in some European countries, to all students who could benefit themselves and others by attending.</p>
<p>The European system makes for HUGE class sizes and rather dilapidated facilities, and there is still less participation in higher education in most European countries, and more socioeconomic class division in that participation, than there is in the United States. The best way to make GOOD higher education to a large number of young people is to what is done in the United States, much of east Asia, and SOME countries in Europe: make private credit available as well as public subsidies for pursuit of higher education. If higher education really has economic value, people will borrow to obtain it. If it doesn’t have economic value, there is little rationale for the working class to pay taxes to subsidize other people’s children pursuing it.</p>
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<p>I think if a “non-custodial parent” has (and uses) visitation, then he/she should be “on the hook” just as much as custodial. It’s one thing if a child never sees/hears from his non-custodial parent, but if the parent is “involved” then he should get an EFC, too. I never understood the reason not to include non custodial parents (unless completely AWOL), after all a “custodial parent” isn’t REALLY “custodial” once a child reached 18. No parent has “custody” of an 18 year old. And… don’t many parents “split” custody these days…??? How is that handled???</p>
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<p>Even children of “intact homes” cannot force affluent parents to “come thru” either…</p>
<p>However, sometimes the situation is such that at the child’s majority, a father who has disliked paying child support doesn’t want to pay for college. It is no secret that the mother more often has had de facto custody and that after the divorce, the average mother gets poorer while the average father gets richer. If the mother can’t pay for college and the child can’t get need-based aid because of the father’s assets and income, what happens to the child? Maybe a college will listen and be generous, but the child has no control over any of this.</p>
<p>Again, why not let the student decide whether he wants to assign all his present and future inheritance rights to the school he wants to go to for the future use of other poor students. Then we would see who really needed the money and who didn’t. I wouldn’t be surprised if turned out to be the poorest students who need the money most. Makes sense to me.</p>
<p>No one wants more to see the father on the hook and having to pay for college, but she can’t make him do it anymore than the colleges can. Who loses?</p>