I’ve been running some net price calculators and have noticed that they all seem to ask for gross income…
My dad is technically a self-employed trucker. He’s contracted with a company and without taking anything else into consideration, makes a bit less than 200,000 dollars a year. Here’s the catch: that truck ain’t cheap. After factoring out all of the expenses that the truck drains from him, including petroleum and having to pay full price for things like doctor visits because he doesn’t get benefits, he only brings home about 50K a year. None of the net price calculators seem to care about that, though. So we look rich, but reality is a completely different story.
We realistically can’t afford to pay the sticker price, or a slight discount, for most colleges, not to mention other essentials that we’ll have to pay for like room and board and books. So my question is, am I screwed in terms of grants and need based scholarships? Are my only options merit aid and scholarships, or community college?
The FAFSA will determine what you can afford to pay based on your dad’s actual tax return with all its deductions. NPC are not accurate for the self-employed.
Schools that use CSS Profile may be quite harsh in their calculations for the self-employed… CSS Profile schools are generally the ones that give the best aid.
Ask your dad what his AGI is. (adjusted gross income…have him look to see what he reported as his AGI for 2014 to give a rough estimate.)
When you say “take home”…Take home INCLUDES the money paid to doctors, etc. Take home income isn’t what’s used to figure EFC.
Use last year income tax return to enter info in NPC. Also use this form to calculate your family business income and assets if your family has a business:
Right…but if the student could at least tell us the AGI, we’d be able to tell the minimum the family would pay. And if the minimum is too high, then certainly any “real” results would be unaffordable.
The student’s post suggests that the parents can’t pay much AT ALL towards college. So, if the AGI is, for example, $100k, then he needs huge merit.
Also…how much is the dad spending going to doctors? If the family income is low enough, they would,either qualify for an ACA subsidized plan…or be eligible for state funded health care…at least for the kids. I’m guessing the in me isn’t low enough for that.
My dad was an interstate truck driver too. He did not spend 3/4 of his gross earnings on expenses. Ever.
@whhalethen As I understand it the reason the NPCs don’t work for people who own their own business is that it deductions are complicated. I had a pretty in-depth conversation with an FA person at a local LAC, because I was concerned about the accuracy of our NPCs as I’m self-employed. She said it varies with schools, but that they looked at the schedules in great detail. If your kids’ school supplies and cell phone bills are showing up on your list of business expenses, they’ll figure it out.
This question has come up at every info session I’ve been to – and I’ve been to a bunch. The financial aid people always say to ask them, as all situations are different! You won’t necessarily be shut out of a private school, but it may be difficult to know ahead of time what will work. Some schools will even do a preliminary estimate for you.
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If your kids’ school supplies and cell phone bills are showing up on your list of business expenses, they’ll figure it out.
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This is part of the issue. Sometimes all of the family’s gas purchases and cell phone plans are being deducted, and those will get added back in. Also, depreciation costs are often added back in as well. If the dad deducts food purchases while “on the road,” the school may add some of those back in as well.
I think that when the dad says that his “take home” pay is $50k after med bills, he’s also subtracting taxes and retirement contributions.
@Charliesch In the most general of terms, but each school has its own definition of legitimate. Some allow a home office deduction, some don’t. Some allow a few travel expenses, but few allow travel meals. The list goes on, and you do NOT want to assume that if the IRS calls it legitimate, the college will too.
The IRS is clear that a self-employed person gets one office, not multiples. But I know a LOT of folks with a small business or significant self employment income who brag about their “home office” at their beach house or ski condo in addition to the massive square footage they are writing off in their primary residence. The IRS has clear mileage rules; limits on gifts and business entertainment, etc. and again- I know a not-insignificant number of people who say, “I’ll wait for an audit”.
OP- I am not in any way suggesting that your parents are not following the letter of the law. But this is why the colleges take a second and third look at the financial picture of applicants whose family owns a business. They are dispensing their own money in terms of institutional aid, and are not as likely as the IRS to let some of the deductions pass without questioning them.
For FAFSA the business value will not be counted…but the income will be. And it still is very possible that some deductions allowed by the IRS for tax purposes will be added back in as income for financial aid calculation purposes.
The financial aid people always say to ask them, as all situations are different! You won’t necessarily be shut out of a private school, but it may be difficult to know ahead of time what will work. Some schools will even do a preliminary estimate for you.