<p>This was originally posted by mom2collegekids</p>
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<p>I tend to agree with this. Being an athlete in college is a part-time job and for a student at an Ivy League college that job ends up being unpaid. I know they get a boost in admissions and that is something, but I still think the student-athlete ends up with the short end of the stick.</p>
<p>@fogfog – You found this out early, maybe it is the universe trying to tell you that you should look at schools that will give your son or daughter an athletic scholarship, which in my opinion they deserve. At the same time you could still work with the financial aid office at HYP and see if once they understand your situation better that might not change the financial aid package they offer you.</p>
We haven’t filled out these forms yet, but I know that we are already screwed because of our rental assets amount. Nonetheless, it would make zero sense to me for them to count ALL of the rents we receive as income to us as well. I’ll update this thought once we actually fill things out…</p>
<p>midsouthmom - paragraphs are wonderful for those of us suffering from eye strain :)</p>
<p>Sylvan – I’m pretty sure you’ll use the information from your Schedule E, which will include both income and expenses. Real cash expenses are going to be netted against the income by the PROFILE process to arrive at the calculated income from rental activities, but they will not include non-cash items like depreciation and amortization. </p>
<p>What’s more likely to be a challenge is that the value (current value less current mortgages on that property) is going to be an asset they’ll assess – unfortunately they treat it just like it is money in the bank. Only advice there is to be thoughtful about what the stated value is – might want to check with a real estate agent and see what value your rental property would have in an “as is, quick, all cash sale”.</p>
<p>^^I would guess that is a good “guess” how it is approached. I only know our profile family contribution is higher than our FAFSA EFC and that it is related to the rental income in some way. I presumed that depreciation was added back and I presumed some percentage of expenses were added back.</p>
<p>Yes, I understand the inconsistency in treatment of employer-paid benefits. (I’ve been ranting about the “unfairness” of the the treatment for defined benefit pension plans and 401(k) contributions for several years on cc (which favor union workers AND government employees) But, unfortunately he who has the $$ makes da’ rules. </p>
<p>Moreover, what the rep told you is technically correct. In the case of an employer that pays a proportion (or all?) of the medical benefits, it is not taxable to the employee. Thus, an employee does not “take a deduction” on that portion (since the company does).</p>
<p>^fogfog, Yes, he is applying SCEA this fall, trying to finish alot of paperwork, etc. right now, even though October is proving to be unfortunately one of his busiest HS senior months. Thanks for the warm wishes. I wish luck wasn’t needed but, as I mentioned earlier, to some extent, I feel it’s just a crap shoot at some of these top 20 schools when so many well qualified seniors are applying. </p>
<p>I did find on Yale’s finaid website for SCEA the “recommended submission date” for finaid materials. As I mentioned earlier, I don’t really want to deal with finaid documents till 2010 but I’m still not certain how CSS fits into this scenario so I might have to contact their finaid to be sure. Anyone know any helpful information about this?</p>
<p>midsouthmom, The equation Yale gave you doesn’t really apply to self-employed people. That is what frustrates the OP so much. </p>
<p>fogfog, I am self-employed but file Schedule C. What I did-- and have recommended people do-- is run the online calculators twice-- once with my personal taxes (which will give you too low an EFC but will accurately tell you if you qualify for any fedl aid) and once using business income in the place of AGI. That will give you too high a number but, in my experience, that was a ceiling. If you run the online calculator that way, does the amount the ivy is estimating fall between the two IMs? That has been accurate for all the meet-full-need colleges to which my kids applied. </p>
<p>Other than that, I agree with the advice to spend down your son’s savings although that would make a small difference. Also, get the book listed above and see if there’s anything you can do about lowering your IM EFC before the year ends and arrange for a call (or meeting if possible) with a FA officer. Read the book first though, so you know how to present things to the FA officer.</p>
<p>*, I agree with the advice to spend down your son’s savings although that would make a small difference. *</p>
<p>True… :)</p>
<p>But at least the kid could use his birthday money for gifts. It seems short-sighted to keep it in an account that a full need school is going to count. If it’s spent, the full need school is going to cover it with a grant anyway.</p>
<p>Since the OP’s husband has an S corporation, all business earnings flow through from the corporation and appear on line 17 of their 1040 via Schedule E. That line on the 1040 is part of the AGI calculation. There are no separate business earnings (S corporations do not pay taxes), and so no way to calculate an EFC using “business income” rather than AGI.</p>
<p>vballmom, if she adds up what her husband was billed and paid during the year and puts that into the calculators, she would have a ceiling. It may be a higher ceiling than she likes but it may not be that far off, especially for a service business. It’s not just a matter of accounting for taxes, it’s a matter of accounting for deductions.</p>
<p>My D is doing unpaid internships rather than doing work study because this is the only way she can gain the necessary experience & connections for her chosen career. Guess I should be complaining about the fact that her Profile school expects a student contribution … “Not fair! Students in other fields don’t have to intern, or get paid to intern! How can they expect her to do work study when she has the unpaid internships (during school & in the summer), 5 classes, a 3.88 gpa, 2 leadership positions, a radio show, and hours of community service?” See, we all have reasons our kids can’t do the work study. Deal with the reality … of this & all the rest. Take it or leave it, because that’s the way it works.</p>
<p>Yes, it is silly to quibble about work/study since a student doesn’t have to do work/study. It is a benefit, one I like very much, but it’s totally up to the student if he/she finds a work/study job or not. No job, no work study pay. As far as “student” contribution, I don’t really see anything wrong with that expectation either. Again, the parent or student doesn’t have to draw down their Christmas money, the parent can choose to pay that amount and leave the kids’ Christmas money in tact. Generally in the scope of the cost of a private college education these are not large sums relative to the total cost. These are simply choices of how families structure the actual act of paying the bill.</p>
<p>Yes, colleges are definitely not like the IRS! Dh has an S-Corp, and we were surprised at the expectations of support from the private colleges (our oldest S went to a state school, so were only familiar with FAFSA). S2 applied to and was accepted at what I like to call the “mighty privates” – schools like UChicago, Georgetown, Notre Dame. What they wanted us to pay would have been very difficult in a good year, and it had been a bad year (2008), thanks to the recession.</p>
<p>Since he’d been accepted to his top choice (Georgetown) EA, it was nearly four months before we found out that their finaid was not enough. (Unfortunately, no matter how early one gets their finaid paperwork in, EA applicants get their finaid award letters the same time as the RD applicants.) I even appealed and got a few thousand more from them. I still remember the great disappointment when we finally got that award letter. All three of the “mighty privates” had awards within a few thousand dollars of each other. </p>
<p>All’s well that ends well, though. S2 is in his second year at a top 20 LAC with a full-ride merit scholarship, one that gives him money back and pays for personal expenses. </p>
<p>If this hadn’t come through, he would have been at our (nationally acclaimed) public flagship as a special scholar. </p>
<p>(He’s getting the money we are saving by not paying for that university for law school.)</p>
<p>Yeah, it’s not like a kid is obligated to accept work study. And even if you do choose to do it, it’s not a requirement that the kid work enough hours to gain the whole award. They can do less work and get less money.</p>
<p>But if your kid is unlikely to do work study, fogfog, do let the school know so they can offer the award to someone else. I went for two years without being offered work study, despite being very low income, because it was so “in demand”.</p>
<p>Yes I have one on othe “waitlist” for work/study also…Kids generally love workstudy because they get some cash in their pocket on a regular basis.</p>
<p>OP –
I read your post on another thread about some of the comments on this one…</p>
<p>I think some of the comments here have been beyond what might be considered “civil”, but I really think you would have been OK on this thread…and would have received less negative feedback…if your comments hadn’t included the paragraph with the apparent surprise about child’s expected contribution. </p>
<p>Liquidating the child’s cash and investment assets over the four years is something that isn’t just institutional method, I recall it’s also part of FAFSA calculation. I actually learned on this thread that the workstudy and summer contributions are expected to help with expenses that are not tuition, room or board. </p>
<p>I hope you’ve been able to get some more concrete answers from the FA office regarding the other aspect of the calculations. Good Luck!</p>
<p>I know this situation sucks for Fogfog’s family but their openess has been a gift to the CC community … I’ve been posting on CC for 5-6 years and I believe this is the most detail a family with a personal business has provided … and has made the FA reality much clearer.</p>
<p>Fogfog, has raised some interesting questions …</p>
<p>1) SS and Medicare taxes - those of working for big companies pay 50% of these taxes while the firm pays the other 50%. For Fogfog they pay both halves … and apparently the FA offer added back the amount of the second 50% (the part a big company would pay). That one does not sound fair at all … I understand the family paid this for their own retirement however it was not voluntary and it is not equivalent of the payments a big company employee would pay … I do not understand this rule at all … it does not seem fair at all.</p>
<p>2) Health care premiums. This one is tougher … Fogfog mentioned that premiums they paid were added back to their income so shouldn’t the premium a big company pays also be added to income. I assume the schools are looking at voluntary payments families decide to make and not the value of a benefit. Currently for a big company employee the amount the family pays is treated equally … it’s the portion the big company pays that is treated differently. I guess Fogfog’s family could be allowed to keep a deduction from their income equal to a typical big company subsidy of health insurance premium … but that’s the rub … there is nothing resembling a typical subsidy … some companies don’t provide health care, some pay a small portion, some pay a large portion … so what would the rule be for Fogfog’s family? Whatever the rule would be it would be pretty kluggy.</p>
<p>3) Fogfog also raised pension payments … not sure this as big a difference as Fogfog believes. For Fogfog’s family all the pension/IRA payments were added back. At this point most private corporations do not have defined pension plans … they offer 401ks (or 403bs at colleges) … for these folks their 401k/403b/IRA contributions are also added back to their salaries … what the company does provide are matching funds … however in the scheme of things this is not a big number. It also seems to me the folks getting defined pension plans (which would have a relatively large company contribution) are mostly paid to jobs (teacher, cop, government clerk) with much lower salaries so not a relevant comparison to Fogfog’s family.</p>
<p>Overall a very interesting conversation and a HUGE help to the CC community.</p>
<p>Yes, it is an interesting thread. The EFC calculators are really just a starting point to help you decide whether you are better off chasing merit scholarships or need-based aid. </p>
<p>“BTW, anyone care to chance him for IVY admission (Yale, Harvard?).” - The Ivyies and other top schools are a “lottery” for all. If you want to see scattergrams, use mychances website (takes some time to input your stats). Many colleges have a fairly predictable pattern of GPA/SAT for acceptance. The top schools are not as predictable, and there are MANY apps for every slot.</p>
As far as I can tell from FAFSA, you only get credit in the “taxes paid” column for the “employee” portion of FICA (they do this calculation for you, it does not come off of the tax forms). So up to 47% of the “employer” portion that self-employed people have to pay (and have no choice since it is a tax) gets added to your EFC.</p>
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I believe if you work for a company and are paying your portion of your health insurance pre-tax, this amount gets added back in for FAFSA. Since a company will generally pay some portion of it (my company pays 80% for example), this is definitely an inequity if you are self-employed.</p>
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Maybe. The CSS Profile asks for how much you have in retirement vehicles like IRA’s and 401K’s. Presumably they are checking to see if you have overfunded (in their opinion) these accounts in an effort to lower your assets. Yet a pension plan, which could have a present value of half a million dollars or more, is ignored by both FAFSA and CSS Profile. Since no one knows exactly what the schools are doing with this information it is hard to say whether there is an unfairness here or not. In my state, public pensions are generally funded by pretax deductions from the employees (who also don’t have to pay FICA), and the state really only has to pay any unfunded obligations. I don’t know if they have to add that back in when filling out the forms, but I would assume they do since it shows up on their W2.</p>
<p>With my S, we were not offered any aid other than loans from any private school, even though our FAFSA EFC was low enough that some aid might have been feasible. My wife is self-employed, and we have rental property. I never asked any of the schools what my institutional EFC was; now I wish I had, it would be interesting to know.</p>
<p>I believe that to be incorrect for both fafsa and for Profile. Indeed, Profile clearly states that it was designed to allow exemptions for health care costs up to those paid by the “average family.”</p>
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<p>I’ve been told by a finnaid officer at a private school that just the opposite is true. They were looking to see if a pension assets were low, they could adjust upwards an allowance for retirement.</p>
<p>Of course, as we all have noted, every college can and will treat every income/deduction item differently.</p>