<p>Here is the scenario:</p>
<p>My wife and I are both full time students at the university this 10-11 school year. We both worked full time 2009 while only taking a couple classes at the community college. In 2009 we made about $37,000. We knew that in 2010 we were going to have a significant loss of income which is why we chose to have a Professional Judgement done.</p>
<p>We submitted all our documentation in July 2010 and had our PJ under review. It ended up being accepted and are estimated 2010 AGI was around $22,500. BUT... My wife had investment that was given to her when her grandma passed away over a decade ago. In February 2010 that investment was cashed out and was about $9,500. They told us that this money would have to be lumped into our AGI for 2010 which put our estimated AGI at about $31,000. With this new AGI we qualified for $1,000 of Pell Grant that we didnt qualify for before the PJ.</p>
<p>Now about a week ago we had our 2010 taxes filed at H&R Block as well as filed our 11-12 FAFSA. When we filed our taxes we were expecting our AGI to be close to the $31,000 that was estimated in our PJ. When all was said and done our AGI for 2010 was $22,399. I hope you see where Im going with this.</p>
<p>As it turns out that investment when cashed out was still an asset, Cash , and the only part we had to claim as income was the $42 dollars it had gained. Now to my understanding assets when it comes to the EFC equation weigh much less then AGI. Now I see a problem with them just lumping that $9,500 into our estimated AGI because by them doing so it inflated our EFC score. Another problem I have is that the investment was cashed out 2/2010 and was gone before we had our PJ done 5/2010. So if the investment was an asset(Cash) and was gone when we did our PJ, were we even required to add that money into the equation? Because it asks for the value of your assets the day you file.</p>
<p>I guess Im just looking for some insight to whether my argument is legitimate because I brought this to the attention of the financial aid personal at my school and they just told me that I was wrong and that it was done correctly. But wouldnt give me any reason why I was wrong and they where right.</p>
<p>If my logic here is right then we are talking about thousands of dollars of Pell grant the My wife and I should have qualified for and didnt get and Im really not ok with that.</p>
<p>Any input would be great! Thanks</p>
<p>If I’m following this correctly, your wife inherited an investment that had a value of $9500 in Feb 2010. You “cashed out” this investment (can you be more specific?) and so instead of a relatively illiquid asset, you then had $9500 in cash. </p>
<p>Do you know the cost basis of that investment? In other words, if it was stock that had a value of $500 a decade ago when your wife inherited it, and it was cashed out at $9500, your gain would be $9000. That gain would appear as capital gains on your taxes and would be included in your AGI. You now have $9500 in cash, so it’s an asset as well. In other words, capital gains and proceeds are double-counted on FAFSA in the year that the gain is realized, although the capital gain is only the net gain (in this example $9000), not the entire value ($9500).</p>
<p>When you originally filed your 10/11 FAFSA, did you list the investment/cash as an asset? Assets are valued as of the original FAFSA filing date and, unless an error is made, they are not revised later on. It doesn’t sound like there was any basis for them to exclude the asset, though I’m not sure why the entire amount would be counted as income unless your cost basis was 0. Inheritances are treated as untaxed income and are reportable or they may have treated that as cash support that you received in making their decision. If they treated it as income earned from work, you actually received employment allowances that you for taxes you didn’t have to pay. </p>
<p>Regardless of how/why they adjusted it the way they did, PJ decisions are final and are not something you can appeal. It sounds like they did exclude approximately $15K in income, which made you Pell eligible. If you and your wife didn’t become full time students until Fall 2010 and were still working, I’d say you were lucky to find a school that would grant PJ! What is your EFC for 11/12 based on the 2010 numbers?</p>
<p>Well for are 2011’-2012’ FAFSA our EFC score came out at 2334. and the PJ for this year came out about 4500. And the PJ should have reflected the EFC of our 2011’-2012’ FAFSA closer then that right? because its based of the same numbers. </p>
<p>As for the investment when it was originally but it it was about the same value as when it was cashed out. It only gained $42 in which we had to claim as income on our 2010 taxes. At one point when it was still invested like 5 years ago it was worth about 14,000 but lost almost all that value by the time we decided to pull it out. Does this make sense?</p>
<p>Our EFC was so much lower for the 11’-12 FAFSA then our PJ even though the same numbers were used as far as the investment and our estimated AGI which was pretty dead on with our accuall AGI for 2010. To me its a matter of them lumping all of that investment into AGI which seems to be the reason for the inflation of our PJ EFC.</p>
<p>I appreciate the feedback, so does this make more sense? Do I have reason to argue the way the data was entered into the formula for the PJ?</p>
<p>Ok so when your wife inherited this asset a decade ago, its cost basis was $9458. You sold it in 2010 at $9500, thus realizing a capital gain of $42. The $42 is declared on your 1040 as a capital gain (line 13) and goes into your AGI. The $9500 in cash is now an asset that you correctly declared on FAFSA. Why that $9500 was also lumped into your AGI for FAFSA doesn’t make sense to me. However, if as sk8rmom states there’s no appeal for PJ, you might be stuck.</p>
<p>Exactly! Our capital gain on line 13 of our 1040 is $42. So if they entered the data into the formula inappropriately, am I just at the mercy of their mistakes. Because if I enter the data and make a mistake and the mistake is caught I’m required to fix it to appropriately. I don’t have a problem with the numbers they got. I just feel they were entered incorrectly which inflated our EFC. There has to be something I can do if I have proof as to why it was entered incorrectly. Right? Any suggestions?</p>
<p>Professional judgement (and whether to even do one) is completely at the discretion of each school and there is no higher appeal. If they feel they did it correctly there is nothing you can do. You are fortunate that you go to a school that was willing to do one. Not all schools will in your circumstances.</p>
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<p>There is nothing that you can do to dispute an adjustment made through professional judgement. Your EFC for this year (10/11) was lowered substantially, wasn’t it? What was your 10/11 EFC before the PJ? There’s no way that a married student with an AGI of $37K and $9500 in assets would have been Pell eligible, so you did receive a few thousand more in grants and perhaps some additional subsidized loans that you wouldn’t have otherwise been entitled to. I wouldn’t sweat it at this point and certainly don’t antagonize the FA office over it…you may need their help again in the future!</p>
<p>Ok well I appriciate all the input it was really helpful. I’ll probably just let it be. It just sucks because if we would have just left the investment alone till after school started it would have just staid under assets where it should have been. And that would have qualified us for more grant money that right now would have really helped.</p>
<p>Anyways thanks for the help everyone</p>