<p>We are self-employed and have a pension of @ $3,000/month. Also have a guest house on our property that we rent out as vacation rental with income of about $60k/yr - all this would put us over $70k mark. We also have about $500k equity in our house. Do we need to count
the income from the guest house for financial aid?</p>
<p>DD has 4.7 weighted gpa (from 11th grade), SAT’s 1950, yearbook editor, same job every summer, tons of clubs, sports. Any chance we can get scholarships/grants? She is looking at UCSB, UCLA, USC and Cal Poly.</p>
<p>UCs are fafsa only schools. How much of the $60k rental income shows up in your AGI? That is what will be counted for fafsa only schools. Schools that use CSS profile or their own finaid forms will look at the rental income more closely and may disallow some deductions that are permitted by the IRS. They also may expect you to tap some of that home equity. Does the $500k include the value of the guest house? I’m not sure if the value of the guest house would need to be reported as an asset as a 2nd home when it’s on the same property as the principle residence.</p>
<p>Only about $30k income from the rental will show up in our AGI. Don’t think we can tap into any home equity as we are self employed and barely managed to get first loan because of this (we are in California), let alone a 2nd…</p>
<p>Yes, you will have to report the income from the rental property. As annoyingdad said, for FAFSA only schools it will be included in the AGI. CSS schools may want more info and may disallow certain expenses that are allowed for taxes.</p>
<p>The value of the rental property will have to be reported as an asset. It will be its value less any loan against the property. (it does not matter whether you can tap into the equity or not, you still have to report it as an asset)</p>
<p>Yes…you have to report the income, and you have to report the value of that rental property. </p>
<p>If you’re able to rent it for $60k per year, then I’m guessing the value is substantial (maybe beach property or similar).</p>
<p>It doesn’t sound like you’re going to qualify for the FA that you’re expecting or needing. I suggest having your D test again (take both the SAT and ACT) and apply to schools that will give her merit for her stats.</p>
<p>Scholarships are mostly based on ACT or M+CR SAT. The Calif publics aren’t good with merit scholarships.</p>
<p>What is her M+CR? It would need to be high for the schools that give merit.</p>
<p>She’ll likely be full pay at Calif publics.</p>
<p>What is your total AGI including the self-employment income? Between the rental and pension income it stands at $66k for fafsa. For profile schools/schools with their own forms some of the self-employment expenses ok for taxes may be added back in also.</p>
<p>Normally we would recommend going to each school’s website and using the net price calculator(NPC) but with both self-employment and rental income they aren’t going to be very accurate for profile schools.</p>
<p>Think we are screwed. Self employment income can vary between $0 and $60k depending on year and job availability. Rental is cabin on my property where main house is and not a separate address thus thought I could role it into one real estate asset as opposed to two. It’s not full time rental - mainly weekends but doesn’t sound like that matters if the value (and income) needs to be reported as separate entity…</p>
<p>D taking SAT again. Rank is 20 out of 268 - not high enough for any Calif. public school
$$$. Agh!</p>
<p>It’s not full time rental - mainly weekends but doesn’t sound like that matters if the value (and income) needs to be reported as separate entity…</p>
<p>it doesn’t matter. I have a rental that is part-time as well. The value and the income would count. The fact that a part-time rental (mostly weekends) is bringing in $60k per year suggests that this sits on a very popular vacation destination area.</p>
<p>As for the value, I would imagine that it would be proportioned by square footage. I’m thinking that if the home is 2000 sq ft, and the rental is 1000 sq ft, then the rental’s value is 1/3 the value of the entire property…meaning that if the property has a $1.5M value, then the rental has a .5M value. And the mortgage would be similarly split. </p>
<p>Since you think that you “may be screwed”, then get creative and figure out how that rental can bring in more money…maybe renting more in the off-season, or for more than mostly weekends. </p>
<p>hope your D is practicing for the SAT. Have her also take the ACT. Why do you think that her rank isn’t good enough for any Calif schools?</p>
<p>
I don’t think that’s right. I think the UCs have a ranking input but I’m not sure about the CSUs. Have you looked at the eligibility index? [CSUMentor</a> - Plan for College - High School Students - Eligibility Index - California Residents](<a href=“Cal State Apply | CSU”>GPA Calculator | CSU)</p>
<p>
</p>
<p>It didn’t format well for the OP, but the OP said the rank isn’t good enough for merit money, not admission.</p>
<p>Sounds as though your assets would disqualify you from Cal Grants even if your income did not. Here’s the chart:</p>
<p><a href=“http://www.csac.ca.gov/facts/2013-14_income_ceilings_new_apps_renewing_recips.pdf[/url]”>http://www.csac.ca.gov/facts/2013-14_income_ceilings_new_apps_renewing_recips.pdf</a></p>
<p>In June of 2013 the “Middle Class Scholarship” was passed and will be phased in from 2014 until it is fully implemented in 2018. This might be something you would qualify for.</p>
<p>“Middle Class Scholarship, which will slash student fees at UC and CSU campuses by up to 40 percent for California families making under $100,000 a year and 10 percent for families making under $150,000.”</p>
<p>[Making</a> College Affordable Once Again](<a href=“http://asmdc.org/issues/middleclassscholarship/]Making”>http://asmdc.org/issues/middleclassscholarship/)</p>
<p>Two caveats however. The “Middle Class Scholarship” is funded through General Fund revenues from Prop 39 and I understand it can be reduced if enough revenue does not come in. Also, UC has been keen to raise tuition and has been kept from it by Jerry Brown after Prop 30 was passed. Eventually however UC will raise tuition and I don’t see any provision for the “Middle Class Scholarship” funding to increase.</p>
<p>Are those income levels “gross amounts” or AGI?</p>
<p>EFC is paid from savings, loans and current income.
If your equity is $500,000, but you cant borrow against it, how much do you owe?
Are you sure you cant refinance?</p>
<p>Screwed is a pretty loaded term.
You have $500,000 in equity, a rental property that contributes enough to bring your income up to almost six figures.
How exactly is this a bad situation?</p>
<p>I’m having trouble with the notion you are “screwed”. You own a property with $500,000 in equity. Your rental generates $60,000 in income and is only rented part time. You also have income in addition to this (and yes, I understand this will vary because you are self employed).</p>
<p>Need based aid is not provided to help fund the businesses of self employed families or rental properties. I would be interested in knowing how 1/2 of the income from those rentals does NOT show up on your AGI. Of course it’s really not my business, but that seems like a huge amount of loss for a rental that is only part time and has $5000 a month worth of rental income.</p>
<p>Start looking at affordable options. Community colleges to 4 year schools is something that happens often and CA has a great network of CCs.</p>
<p>Look on the financial aid forum for guaranteed merit awards. Maybe something there will match your child and be of interest.</p>
<p>Keep in mind that schools requiring the Profile for need based institutional aid consideration will look very carefully at your rental deductions, and business deductions. It is very possible that some allowed by the IRS will be added back into your income for financial aid calculation purposes.</p>
<p>* Your rental generates $60,000 in income and is only rented part time. You also have income in addition to this (and yes, I understand this will vary because you are self employed).*</p>
<p>they also have a pension that brings in $36k per year. So, $96k per year without counting business income…which can be up to another $60k per year. </p>
<p>I think the family may be house-poor because it sounds like their property is in a high-cost vacation area. The mortgage and taxes on the property may be very high. </p>
<p>the family needs to accept that they won’t qualify for aid at Calif schools and at a number of others. </p>
<p>They may need to get creative: bring in more income from the rental, bring in more money from the business, have one parent work for a company to bring in reliable income, look for schools that will give large merit for stats, have their child commute to college to save on R&B, and so forth. </p>
<p>I can understand why they can’t refinance. Their income may not be reliable enough to qualify.</p>