<p>I have a really weird financial situation. I live on a ranch, and, therefore, my family has a lot of assets due to land ($2.5 million, about??). However, the ranch is basically a "sinkhole" in my mother's terms. In 2008, we had an AGI of -$400,000 and 2009 will be comparable, if not even less. In addition, due to continued expenses, our ranch has $1.25 million in debt. Has anyone else been in a financial situation like this? We really can't afford much... how will the huge assets affect financial aid, even with nearly half a million dollars down the drain yearly?</p>
<p>Colleges will not see your AGI as you do. The ranch will be seen as an asset you can borrow against.</p>
<p>Are you a senior in high school? Your financial aid will be based on your 2010 family AGI. I would think a negative AGI of that magnitude would trump any net assets that your family owns. Have you tried running a FAFSA calculator to see what your EFC would be?</p>
<p>If your ranch’s land value is $2.5 million but has a debt of $1.25 million, the net value of your assets would be $2.5 - $1.25 = $1.25 million. That would give you an EFC on paper of around $70,000. However, income weighs much more heavily than assets in the FAFSA EFC calculation, so your negative income should bring your calculated EFC down quite a bit.</p>
<p>vballmom, I don’t think you can put negative numbers on the FAFSA. The lowest would be $0. Even with a negative income, this individual has a significant asset the school will view as usable in most likelihood. </p>
<p>If the family really has NO income, and either files a 1040 EZ or 1040A, OR has the low income and receives free or reduced lunch, food stamps or any of a number of other government subsidies, they might qualify for the simplified needs test and their assets would not be viewed at all.</p>
<p>However, they would need to get that government subsidy. I don’t know how eligibility for free lunch and the like consider assets like property. With a farm, they most likely file a long 1040 tax form.</p>
<p>Negative income treated as a zero on the FAFSA. </p>
<p>To have a negative AGI you can’t be eligible to file a 1040a or 1040 ez. So for eligibility for simplified needs you would have to meet one of the other criteria. Means tested benefits or displaced worker.</p>
<p>However on FAFSA:</p>
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</p>
<p>This may not apply to CSS if any of your schools are profile schools.</p>
<p>I’m pretty sure that a negative AGI can be entered on the FAFSA form. If income from work (a separate line from AGI on FAFSA) is negative, then it is to be entered as zero. I’ve got the spreadsheet bookmarked, will look :)</p>
<p>You may be able to put a negative number (don’t know, never tried). But the EFC formula will treat it as a zero.</p>
<p>This student may need to look at schools that will give big merit for stats. </p>
<p>What are your stats. What state are you in.</p>
<p>Negative income can be entered, and net parent contribution is set to zero if adjusted available income (AAI) is negative. The way I read this is that AAI is the sum of contribution from assets and contribution from income, so if income + assets < 0, the parent contribution is zero.</p>
<p><a href=“http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf</a></p>
<p>Lines 25-26 of worksheet A.</p>
<p>AVAILABLE INCOME (AI) (from line 15) <strong>-400000
CONTRIBUTION FROM ASSETS (from line 24) + __</strong>70000
25. Adjusted Available Income (AAI)<br>
May be a negative number. = _<em>-330000
Total parents’ contribution from AAI _</em>_0
(Calculate using Table A6.) If negative, enter zero.</p>
<p>Of course all of this is moot if the net worth of the ranch is not reported.</p>
<p>Slightly OT but I’m pretty sure the reason parents can enter a negative is that the student’s AAI can offset the parent’s negative AAI, therefore the student can be earning more than the typical allowances and still not produce an EFC over 0.</p>
<p>The very first line of the EFC formula states </p>
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</p>
<p>You can get a negative AI based on other allowances, but according to the EFC the AGI will be set to 0.</p>
<p>But if the ranch/farm is the primary home then it is not a reportable asset anyway.</p>
<p>the ranch part of the home will be considered a business, just as a home business run out of the home will be considered even though the actual home part is not. the only way to wriggle out of this little dilemma is to use the simplified needs test.</p>
<p>As posted above, if this farm IS a business, the OP would not be able to file a 1040A or EZ form. Therefore, in addition to a $0 income, he/she would need to have received one of the federally subsidized things like free school lunch, food stamps or the like. </p>
<p>The big question I have is WHY is the AGI minus $400K? Is it because of the taxes on the farm? Is it because of business debt? What are the reasons?</p>
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<p>I wouldn’t be surprised if it WAS taxes. It seems like the gov’t has nothing better to do these days than to ruin anyone who is even slightly economically productive. hope and change, you know??</p>
<p>A ranch is considered the same as a farm for tax purposes. Assuming this is the same for FAFSA, is the primary home, and is operated by the family, then it would not have to be reported on FAFSA.</p>
<p>from [Completing</a> the FAFSA 2010-2011/The Application Questions(89-91)](<a href=“http://studentaid.ed.gov/students/publications/completing_fafsa/2010_2011/ques5-1.html]Completing”>http://studentaid.ed.gov/students/publications/completing_fafsa/2010_2011/ques5-1.html)</p>
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<p>One thing to consider…the value of the “ranch” will likely be considered in a very different way by schools that use the PROFILE. These schools often do NOT discount the value of the family ranch or farm. It’s considered an asset regardless of whether it’s a primary residence or not. </p>
<p>The OP has not mentioned schools, but if the Profile is required, I would be more concerned about that ranch than with the FAFSA.</p>
<p>EVEN with a $0 EFC and max Pell grant, Stafford loan and Work Study, this will not fully fund a four year residential college anyway…it just won’t.</p>
<p>I brought home the forms for free and reduced lunch. Do you know if the simplified needs thing applies to the PROFILE or just the FAFSA?</p>
<p>The AGI is -400k simply because the costs of raising, vaccinating, feeding, machinery to harvest hay to feed cattle, etc. are MUCH less than their selling prices. In addition, we have a lot of carryover. We don’t have to pay taxes, as we have negative income. </p>
<p>Yeah, a lot of the colleges I really want to go to require the CSS PROFILE. Is there any hope? I’ve heard that some colleges are more understanding with farm/ranch assets, but that may just apply to in-state schools.</p>
<p>I’m in Nebraska. Female, 34 ACT, 4.0 GPA, National Merit Semifinalist, State Officer in a CTSO. If I get NMF, I have almost a full ride to UNL… however, I don’t think a 20,000 kid state school is really right for me. I would love to get out of Nebraska, at least for college, and attend a top-tier school. (Rice is my dream school, but with the financial aid I don’t know how feasible that is… :S )</p>
<p>Simplified needs is just FAFSA.</p>
<p>For FAFSA if your ranch is also the primary home and the family is operating it then the ranch is not a reportable asset.</p>
<p>You may have to report it for CSS, I don’t know anything about CSS.</p>
<p>The value of a family home is reported on CSS Profile so yes, the ranch would be too. </p>
<p>First, be sure to apply for free/reduced price lunch if you qualify. The one catch is that, unless you have younger siblings, you won’t be eligible for simplified needs past freshman year (since you wouldn’t have anyone to apply for free/reduced price lunch program). This will help you most in FAFSA-only schools. </p>
<p>Next, look into the colleges generous with NMF. You really need to include some of those in there. </p>
<p>Last, call up some of the Profile schools, ask to speak to a financial aid counselor (not a work-study student) and explain your situation. Then ask him how the school would 1- count/see your family income, how they would 2- count the property value of the ranch and how they count 3- the business value of the ranch. Write down the answers for each school and, if you need clarification, come back here and ask. This will give you some insight.</p>
<p>The lookback period for federal means tested benefits changed from one to two years recently. So, if the OP is approved for free/reduced lunch for 2010/11, that should carry through until 2013 for FAFSA unless the rules change again.</p>