I’ve read on various posts on CC that parents who 1. own a business 2. self-employed 3. own rental property affect NPC’s. How do they affect NPC’s? My parents are all three of those things. Should I be worried? I was planning on applying ED to Cornell but I read that having these three things = definitely should not apply ED. Could somebody explain this to me please?
Yes, you should be concerned.
- There are business expenses that the IRS allows as deductions which will be added back in as income by some schools.
- For those rental properties...the equity in the homes will count as an asset. The rentals will count as income. Some expenses allowed by the IRS as deductions could be added back in as well.
- Those who are self employed often take deductions that are allowed by the IRS...but are not allowed for financial aid calculation purposes.
None of the above things will be reflected in the net price calculator calculations.
@thumper1 So generally, I should expect to pay more than the NPC states?
It just means it is very hard to determine in advance what your aid will be, therefore you will have to accept or reject the ED offer without being able to compare with other offers. If you are okay with paying full price it may not affect you. Likewise if you will walk away from a predetermined number, with knowing your instate is affordable, then fine. It is just a hard situation to be in and many kids are not mature enough to handle that well.
When you use the NPC, make those assumptions that @thumper1 listed but still you can’t count on anything. Yes you will be paying more, the schools usually feel that property can be sold or borrowed against to finance school.
Yes, you should expect to pay more than the NPC states.
There is no way to know…because policies vary by college. But it is likely that the net price calculator will not be accurate for you.
How much is your family gross income? How much is your family net income? If there is a huge difference, then likely there are huge deductions…and it is very possible that some will not be allowed for need based financial aid purposes.
What is your family adjusted gross income? What is the equity amount of the rental properties?
You don’t have to tell…but if these are high numbers…you may not be eligible for much need based aid anyway.
If finances are a significant concern…why are you applying ED? Your situation is not a simple income one.
@thumper1 AGI should be around 65k-70k for 2015, equity is around 270k on rental properties only. This is bad, right? I guess I should not be applying ED.
What is the gross income?
What are your parents able to contribute to your education annually?
The equity in the properties alone will add about $15,000 to your family contribution.
Have ‘the talk’ with your parents - ask them how much they can pay each year for 4 years.
How much can you personally contribute from your own savings and future summer job earnings?
Are you the oldest or only sibling?
Have you tried the FAFSA EFC calculator on the Big Future website? Have you tried any NPCs and then shownyour parents the results? If so what was the reaction? (Again, those won’t be accurate in your situation).
@thumper1 @Madison85 Gross income is about 80k for 2014 but 2015 will be lower. I’m assuming around 65-70k. The only deductions were about $600, so the gross income should be pretty close to 65-70k for 2015. I don’t have savings but I would definitely have to work. I could maybe contribute 5-7k? Theres 2 siblings older and 1 younger, so I guess I’m the middle. I told my mom around 20k was my efc from NPC and she said something close to thats fine, but those aren’t accurate.
If all,the OP is able to put into the NPC is an income of $75,000 a year, it might look like their family contribution is affordable…in the $25,000 a year or less range. But they at least have to add the asset value of the rental properties…this would be 5.6% for fafsa purposes…or about $15,000 in addition to whatever amount is based in income.
The other thing I forgot above…I believe for schools using Profile…(and Cornell does) the business will need to be assigned a monetary value as well.
To the OP…sure…apply ED if you want to…but you need to have an amount that your parents can fund. And if Cornell does not provide the necessary need based financial aid, you will need to decline an acceptance if you receive it.
You should also plan to have all your other applications submitted as,early as possible.
If you are really a competitive admissions candidate for Cornell, there are schools where you might garner merit aid. In most cases, the applications for admission…and applications for merit of a separate on is required…are due by end of November. You don’t want to miss out on those opportunities while you wait for an ED decision.
@thumper1 thank you 
Does that AGI include income from the rentals?
What kind of business do your parents own? Do they own the property that the business sits on?
how much is the business worth?
What about savings/investments?
retirement contributions?
What are your financial safeties? You need to get those apps in ASAP since merit scholarships often have Nov and Dec deadlines.
@mom2collegekids Yes, the AGI does include rental income. They own a car delearship, they do own the land. The business might be worth about 30k. Savings is about 30k, aside from 401k.
I have already applied for Alabama
a car dealership will be worth more than $30k. What about the cars that the dealership owns? Any used cars?
you do realize that your parents OWN the cars that are on the lot? right?
I think you need to speak to your parents about how much the business is worth …including the business’s assets.
@Mom2collegekids The cars and all assets are worth about 30k. The property is worth 60k. I know because I have asked before.
^
Your parents have a car dealership with what? 6 old cars on the property?
They own a car dealership and the land and additional rental property and the sum total of ALL deductions is $600?
That cannot be correct.
Are there only three cars? I mean really…$10,000 each for cars would be 3 cars. And that would be for used cars.
They are all used cars and might I add not very valuable ones. It doesn’t matter how many they are, it’s what I’m claiming is true so why can’t that just be used for the purposes of this thread? I’m staring at all the tax files and I can see that is what it says. and Yes, I looked at the income tax, there was a deduction for 600.