This is the part I don’t understand: if employed people have it so much better, why don’t you shut down your business and get a job? I would imagine the benefits of being self employed are that you get to keep all the profits. If your business isn’t doing well enough to afford you the lifestyle you want and you don’t feel you’re being adequately compensated and the employees have it so much better, why don’t you become one? I’m not trying to be insulting, but it seems to me that self employed people come on here all the time and complain how well employees have it. It just doesn’t make sense to me.</p>
<p>I’ve been self employed for 30 years. I’m allowed to put so much more into a retirement plan than employees are. It’s true that I have to pay both portions of the social security and medicare taxes, but those are deductible to the business and I don’t pay tax on that money. And I make more than someone who is an employee makes because the profit from the business is mine. If I wasn’t benefiting from this, I’d become one of those employees. I’m certainly not going to do this and then complain that because of this, HYP won’t give me free money for my kids to go to school.</p>
<p>My husband has been self-employed for over 25 years. For the past 2 years, in his professional services industry, that means virtually unemployed. But over the years, his business has allowed us to save for retirement and also save for college expenses for both kids (and for a while, allow me to work part-time and be home for the kids when they were young). The benefits of self-employment have far outweighed recent economic woes.</p>
<p>And anecdotally…our FAFSA EFC last year (for both kids combined) exceeded 40% of our AGI. S2 is at a Profile school and I honestly have no idea how they evaluated our business supplement information. But the FA package was just about as expected and included loans, work study and institutional FA that we assume will disappear once we only have the one in college.</p>
<p>People have made good points–I would just say that I can’t help feeling for somebody who believed they’d be paying $x for college, and learns they’re expected to pay $3x. That’s tough to take, even if some of the expectations may or may not have been realistic.</p>
<p>Fogfog … sorry to hear about your disappointment on your FA preread.</p>
<p>I’ve tried this a couple times but I can’t seem to write this without it sounding harsh and I apologize for that. When I read this thread it seems to me that your family needs to throw out its’ preconceived notions about how FA works and take an open and honest look at the situation and that it means for your child(ren). The bottom line is HYP provide among the best FA in the country and your family is unlikely to do much better with pure FA anywhere (merit aid is another story and may help A LOT).</p>
<p>The things in your post that stick out to me include …
Surprise that they expected summer earnings and a work-study job from the student
Comments about no assets … but then references to IRAs and SEP contributions … so they appear to be tax sheltered retirement accounts … are there any other assets you thought would not be considered?
The focus on your AGI … this one I have sympathy about … I understand why someone might think that but I’d be surprised if any of the schools documentation says that. For example, on CC at least, the fact that retirement account contributions are added back in is well known.
It is often mentioned that small business owners often do not fare as well as salaried employeers on FA … I’m not in position to comment on that. But it does seem reasonable that schools add back to income many items that businesses can deduct (deprecation on the home office, for example). Without knowing specifics we do not know which business deductions were added back in but my impression is you thought all the deductions would also be included in the financial aid calcualtion.
You mentioned $33k in health care expenses above the premiums … if these were one time expenses the school can expect this money to be available in the future … if these will be reoccuring expenses it is reasonable to request some adjustment for them.
I also believe you mentioned an expectation that your families income will drop next year … this might also be reasonable to ask for an adjustment.</p>
<p>Hopefully the school will explain their calcualtions … and that that with this information your family can figure out plans that work for you all … good luck!</p>
<p>The other side of the coin is after acceptance, students are not obligated to stay with their sport. Some students use their athletic abilities and recuited athlete hook as a mechanism to get into college here it could be harder for them to be admitted as a non recruited athlete (I have known kids and friends of my kid who used their sport as a recruited athlete hook and then quit the sport). No one is going to play football at Harvard with hopes of one day going to the NFL. If a student was looking for a hoop dream, they would most likely attend Duke (on scholarship) and be a Blue Devil before playing playing for Yale.</p>
<p>I agree Hunt and I appreciate fordiscussions’s persepctive. It is unrealistic not to expect private colleges to build back expenses into income that salaried people generally pay out of income, but it can be tough to find out what that really means in terms of expectations for finaid. I think too that again, people read websites and their eyes miss words like “may”, “might”, “assessed need”, “can” and all the qualifiers. Fortunately there are many great choices in North America for students and fortunately for the OP it is very early in the cycle and they will have time to find a great school that will fit their budget.</p>
<p>"I would just say that I can’t help feeling for somebody who believed they’d be paying $x for college, and learns they’re expected to pay $3x. "</p>
<p>I wonder what “calculator” OP used to predict the EFC. (You can use a school’s calculator or Finaid.org’s QuickEFC- but these are very,very rough ideas without all relevant data.)<br>
MUST use the FAFSAForecaster - it asks for the detail that parallels the official EFC determination process. You can play with it and see how sample EFC changes- eg, with all the same other info, try increasing/reducing one detail and you’ll see how (or whether) it affects EFC. In our case, my final income is uncertain; I played with what I think I’ll earn in 2010 versus what I might earn if the winds all blow in the right direction.</p>
<p>Yes, CSS may be higher- schools may view numbers differently. Still the Forecaster gives a far better pre-picture than ordinary calculators.</p>
<p>It is the parents’ responsibility to check and recheck all available web and published info about how finaid works. I don’t pity capable parents who make assumptions; I pity undereducated parents who have to tackle this without research and analytical skills- the ones struggling to make ends meet who can’t even understand the questions on the forms.
I’m sorry this is harsh. But, many of us posting here do frequently comment on FA- we sweated out trying to understand as much as we could, to be prepared. For us, CC is not a “source” of info. It is a place to share our experiences.</p>
<p>Having a house that is “upside down” - we expect no breaks. OP does not mention the value. If it’s worth $X, then that’s your asset level. What you have lost makes no difference.</p>
<p>Some students use their athletic abilities and recuited athlete hook as a mechanism to get into college here it could be harder for them to be admitted as a non recruited athlete (I have known kids and friends of my kid who used their sport as a recruited athlete hook and then quit the sport).</p>
<p>Yes, I bet that happens a lot. I wonder if that’s why some of these top D3 schools are demanding better scores for athletes. My sis’ son was told that he needed to improve his scores to be admitted. When he got an ACT 33, he was. </p>
<p>There was a student posting recently that plays football with lowish scores and is being recruited by ivies. I guess nothing would stop him from picking the best ivy offering, getting accepted, play for a bit, and then quit. He’ll be at an ivy with scores at the bottom quartile. :eyesroll:</p>
<p>Back to topic.</p>
<p>*The things in your post that stick out to me include …
Surprise that they expected summer earnings and a work-study job from the student*</p>
<p>I think several families and students are surprised to see that because these schools hype that they are so generous and meet need. </p>
<p>Again, these schools really aren’t interested in providing free money that goes towards the “personal expenses” line item in COA. They don’t want to pay for toothpaste and Friday pizza night.</p>
<p>“On top of that, they want $1500 from our kiddo in summer earnings-kiddo doesn’t have summer earnings/$1500 cash”
“AND they want kiddo to work on campus…for an additional $3k a year”</p>
<p>The HYP finaid web pages make it clear they expect the student to contribute toward the cost of his or her education.</p>
<p>It is important to understand that while 1040 tax forms can be used to confirm income and expenses for PROFILE/FASFA- the two are not flip sides of same coin.</p>
<p>Its important to have the discussion about what your family can spend for college out of future/current and past earnings, before your child applies to college.</p>
<p>Ivy type schools are just one option that is available for further education and if a student is qualified for ivy admittance, they are also likely to be eligible for merit aid at another school.</p>
<p>Does the Fin Aid office add back into everyone’s Income the employers contribution to retirement/pension.
…meaning since the business’ expense which was added to untaxed income–
does that mean everything anyone’s employer adds to their pension acct/tax deferred, even though its not current income to that family…is counted as avilable $ ?
Isn’t that odd?
Your employer’s contribution (not your (employee matching contribution) is counted.</p>
<p>As for the comments about the student contribution–thats not a surprise–whats a shock is how the convoluted accouting method used.</p>
<p>Hope you all get a chance to look inside how your EFCs will be calculated…and do not trust the calculators online… You may be surprised. Good luck.</p>
<p>Our workplace gives “monetary” awards instead of a raise which is counted as available cash both for taxes and for finaid- even though it is not received as cash, but as “points” to be spent at the company store.</p>
<p>oh boy- why the hell would I prefer to get hundreds of dollars every month to buy sharper image type stuff instead of maybe getting a raise?( and of course everything is always full retail- we can’t ever find anything to buy, so our points are in the hundreds)</p>
<p>We had pretty good luck using the finaid.org calculator- it was accurate for us- unfortunately. ;)</p>
<p>“Does the Fin Aid office add back into everyone’s Income the employers contribution to retirement/pension.”</p>
<p>Your questions may differ from our experiences because of the business. This is from one Fafsa help page:
“Payments to tax-deferred pension and savings plans. You must report money paid into tax-sheltered or deferred annuities (whether paid directly or withheld from earnings), including—but not limited to—amounts reported on the W-2 Form, in Boxes 12a through 12d, codes D, E, F, G, H, and S. You must include untaxed portions of 401(k) and 403(b) plans. Note that employer contributions to tax-deferred pension and savings plans should not be reported on the FAFSA as an untaxed benefit.”</p>
<p>I believe this says your own payments to retirement, which would be IRS tax-deferred, should be included on the finaid forms. Not employer contributions. Our employers do not report this on W2.
Again, I can’t speak to business accounting.</p>
<p>Actually this is just another family going through EFC shock. Having worked with many families to help them understand aid, I have found that business owners are often the most shocked. Think about it, they enter into a pact with an organization meaner than the IRS. Unimaginable.</p>
<p>*Hope you all get a chance to look inside how your EFCs will be calculated…and do not trust the calculators online… You may be surprised. Good luck. *</p>
<p>I think they probably work ok for those who are employees or don’t have unusual circumstances. I think they also work ok for those who don’t make over 6 figures and/or have substantial assets.</p>
<p>I don’t see how this is true. The net value of an upside down house is a negative number (it’s worth less than its mortgage). At that point it’s not an asset, it’s a liability. House values are not reported on FAFSA, but they are on Profile; the form asks for the current value, its purchase price, and the year purchased if I recall correctly. The current value would be a negative number, or zero if negatives are not allowed.</p>
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<p>I agree with this for FAFSA-only schools. However, family-owned businesses of less than 100 employees are not reported on FAFSA, but they are on Profile, so the calculated EFC from the FAFSAForecaster would have been way off for the OP. The problem is that Profile schools and Ivies do not have a transparent way to calculate EFC, unless they provide them on their own financial aid web page. The Profile schools that do this tend to give families a fairly accurate reading of what they think families can pay. The schools that don’t leave the families with absolutely no idea of what their expected contribution might be, given the variations in how home equity, businesses deductions, medical expenses, student earnings, etc etc are treated.</p>
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<p>As I said in a previous post, the business can either use that money to contribute to its shareholders’ pensions, or else distribute the earnings. That business contribution to retirement in the form of a SEP-IRA contribution would otherwise increase business earnings and show up on the shareholder’s 1040, thus increasing the shareholder’s AGI; either way, the school expects those dollars to be included as available income.</p>
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<p>You imply the OP went into this exercise blind. If you read her posts on the athletic forum, you’ll see she started preparing last spring for an early read for her athlete and gathered as much information as she could about the process.</p>
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<p>Is there a way that Profile colleges could be more transparent with how they value business earnings, deductions, and assets, and the effect of those on the determination of family need?</p>
<p>The net value of an upside down house is a negative number (it’s worth less than its mortgage). At that point it’s not an asset, it’s a liability.</p>
<p>But finaid doesn’t take debt into account for anyone.
They may consider ongoing expenses or huge debt if incurred for something like a heart lung transplant for your toddler, but for a big house that you got stuck with when the economy tanked- no.</p>
<p>House values are not reported on FAFSA, but they are on Profile; the form asks for the current value, its purchase price, and the year purchased if I recall correctly</p>
<p>My impression is mortgage and auto expenses are noted on PROFILE not to calculate debt as part of added need, but to identify places where you can downsize to free up funds.
;)</p>
<p>On the question of a self-employed person, and the “employer’s share” of retirement/pension: it seems to me that the colleges might believe that because this amount is under the control of the person, that it should be considered “available.” Obviously, this is less true if you aren’t your own employer. It still seems a bit unfair, though–perhaps it would make sense to exclude this amount, up to some limit pegged to averages for employees.</p>