Complicated asset situation

Paying for College
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<p>Free advice here…don’t focus on the “tier” of the school. Focus on what the school has to offer your child in terms of the curriculum choices…AND…if finances are a consideration…what they schools may have to offer your son in terms of money.</p>

<p>The reality is that there are tons of wonderful colleges out there that are not in the top 50 schools…or even the top 100. Chasing after the “tier” might make you ignore a fabulous school where your son could study what he wants to study…AND receive the financial help to make it happen.</p>

<p>And another thing to remember…MOST students change their majors at LEAST one time while in college.</p>

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<p>I would get him professional help for the SAT, doing well could easily mean the differerence between strong merit aid or not.</p>

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<p>Regarding OP’s question about the impact of owning rental properties on aid:</p>

<p>Someone mentioned above that if a “business structure” was created around the rental real estate it would not have to be reported on FAFSA. I would assume this would mean something like an LLC or an S corporation which would be a real estate holding corp.
This seems like a good idea, but there are a few more factors to consider:</p>

<p>Profile schools do want to know the value of your interest in any small corporations, even though FAFSA doesn’t. How they use that information varies. Again, it is hard to put a value on the shares you own in a privately held corporation.</p>

<p>For S corporations, at least, any net income (i.e. after expenses) which the corporation produces goes directly onto your 1040 form. (Not too familiar with other corporation types.) </p>

<p>There also many be longer term tax implications if you sell your shares in the corporation as far as capital gains, so this strategy should be examined by a good CPA.</p>

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<p>I was also thinking about creating a corporate structure for the property, and how that removes the property value from the reportable asset class on FAFSA. However, it could be that to transfer the title of the properties to an S-Corp, a reassessment might be required (and possibly even a refinance, depending on the terms of the current mortgages). This may or may not be advantageous for the OP. Could open a whole 'nother can of worms.</p>

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No, the guidance office says they use the Common App site. Does that do something comparable?</p>

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<p>Naviance will tell you where previous students from the school with certain GPAs and SATs were accepted. The Common App is totally different: the web based app through which you do your college applications.</p>

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<p>OP…what does your GC say about the college choices your child is making? I’m not saying that all GCs have the best info…but they DO know which local schools their past students with your kid’s stats have been accepted to. Perhaps your kiddo should start there.</p>

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<p>There are legal ways you could force a sale of the property even if the brother in law doesn’t want to sell. It’s call a partition and sale. Of course, you will not likely get maximum value for the property, but in an emergency with a recalcitrant relative, you may want to consult a real estate lawyer.</p>

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<p>Second the recommendation that your kid try taking the ACT - some kids score a lot better percentile-wise on on test versus the other (i.e ACT socre in the 95th percentile vs SAT in the 85th, or some-such). Of the kids I know who took both, all fared better on the ACT, sometimes by a pretty significant amount.</p>

<p>The late registration deadline for the June 12 ACT is May 21. You also should know that many community colleges and 4-year colleges offer the “provisional” ACT - the score is only good for use at that particular college, but the upside is that they give it VERY frequently (sometimes once every week or two!) - so it can be convenient to schedule it as a “practice” run, even if the kid has no intention of going to that local school. In our area they don’t offer the provisional ACT with the writing section - not sure if this varies or not.
After June, the “regular” ACT is not given again until September.</p>

<p>In my 2 kids’ experience, ACT scores can be increased quite a lot with not-all-that-much practice (just from using various review books and the old “real” ACTs made available.)</p>

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<p>I’m not saying he shouldn’t apply to Geneseo but I’ve known kids with much higher stats get rejected. Geneseo has become very competitive for admissions in the last few years although they do tend to be more holistic when looking at apps. His racial status, EC’s, interests, etc. could make him more competitive that a 91/1250 would appear. Your GC should be able to provide more insight on kids from your son’s school who have been accepted this year.</p>

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<p>Not sure why everyone keeps saying we should sell the rentals. Perhaps they are not getting the point. If that is what the colleges expect, then they are not getting the point either, which would come as no surprise to me. </p>

<p>DS will take the ACT in June, but he will not have much time for practicing beforehand.</p>

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<p>Well not unless red hair is a new racial category :). EC’s and other things might be helpful. I think he would do well in an interview if he gets the chance to get that far (not at Geneseo, since they don’t interview, but elsewhere).</p>

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<p>Lol, you never know what colleges might be looking for! Most of the kids I know at Geneseo are personable and quite interesting and maybe that’s reflected in their essays, but they generally only take 1-2 from our rather small (200 grad) but well-regarded high school each year - usually a val/sal and sometimes another top 10 kid. Friends in larger surrounding districts report the same and kids in our area are encouraged by their GC’s not to fall in love with Geneseo!</p>

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<p>Caveat: I do not know the details of FAFSA evaluations of assets…but how did you arrive at the valuation of your half of the property?</p>

<p>Other rental homes in the area may be selling for a certain price, but they are selling. If your brother in law refuses to sell and he must agree to any sale, then your half of that is NOT comparable to the sales prices of other houses in the neighborhood. </p>

<p>If you can’t sell it, then your half is essentially valueless except for the rental income. Or you could value the house as the rental income being a 5% return and multiply the value of the house from that. </p>

<p>But I would still argue that if your interest in the house cannot be sold it is only worth the value of the income.</p>

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<p>When you say lower tier, do you mean “not top 20”, or do you mean Tier 3/Tier 4 schools? Everything we are considering so far is Tier 1 (or in the now vanished Tier 2) - is that a mistake do you think?</p>

<p>With your EFC, you absolutely should NOT be focusing on Tier 1 schools. What would be the point of applying to schools that will expect you to be full pay unless you can pay full pay? Those schools will see your EFC and give you NOTHING. If you’re not prepared to pay $55k+ per year, then you need to move way down the list. </p>

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For you to have an effective strategy, and for us to help you come up with a reasonable list you need to tell us how much you can afford to pay each year for your son’s education.</p>

<p>The reason why I suggested 3rd and 4th tier schools is because that’s where your son will need to look for bigger merit scholarships. Now, if he gets a 32+ ACT or a 2100+ SAT, then there are some Tier 2 schools that would give him big merit. For your son to get big merit from various schools, his stats need to be high in the upper quartile of a school. Right now, his stats aren’t there.</p>

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<p>Well unless some of these places are lying about where their incoming stats are, that certainly isn’t the case. You are making him sound like an academic failure, which I don’t find helpful. </p>

<p>I hear people say “well, my kid has a 97 and didn’t get into School X, so your kid can’t get in there with a 91”, as if every school just lines up the gpa’s and accept so many from the top. If that were the case, there wouldn’t be a need for any of the rest of the application, and schools could save a bundle on admissions personnel. Just because we can’t afford the whole of what our EFC is expected to be doesn’t mean that we can’t afford anything, so I’m sure we will come up with something workable.</p>

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<p>Sylvan, I don’t think M2CK is saying that he wouldn’t be admitted to the higher ranked schools and no one is trying to suggest that your S isn’t a bright, successful student. But this thread has evolved from a discussion of how high the EFC will be to other ways to make college costs affordable, which is essentially merit aid. So, she’s trying to give you a method to look for big merit money and this has been an effective strategy for many people in the past. </p>

<p>Ideally, for great scholarship opportunities, one looks at schools where the student would be in the top 10% or so of the incoming class. The averages that schools and College Board post come from their Common Data Set and you’ll notice that they don’t tie the admittance numbers to the scholarship data (ie. the average scholarship may be $20,000 but that doesn’t mean they went to kids who had stats in the middle 50% range). I agree that many schools look at kids more holistically for admittance, but I think you’ll find that the vast majority of merit scholarships are awarded based on GPA, test scores, and class rank. Even the ones that require interviews are first vetted based on numbers.</p>

<p>I agree with M2 that you must first decide what your budget/target number is and that will help tremendously in the process of deciding which schools would be suitable reaches/matches/safeties for your son. We’ve learned on these boards that it’s very hard for a kid to hear, post-acceptance, that their favorite school is unaffordable and that kids who know the financial limits are generally more likely to keep their minds (and hearts) open. If your family is determined to support him at any cost, that’s fine too and there’s no need to concentrate on finding scholarships!</p>

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<p>I’m sorry but this is NOT accurate. Your willingness to sell your property OR your ability to sell your property do not factor into the equity value of the property. </p>

<p>If <em>I</em> decide not to sell my primary residence…because I just don’t want to or because I anticipate doing so for my retirement, that does NOT matter ONE SPECK in the calculations for determining how much equity I have in my home. </p>

<p>Please do not give misleading information to folks who own property. The equity is determined by a lot of things including the fair market value (and this IS partially based on sales of comparable properties), and the amount you continue to owe on the property.</p>

<p>To the OP…I have to say…your asset situation isn’t “complicated”…it’s just not the way you would like it to be. There is a difference. There are others who own rental properties, and also who own them jointly with others. Your situation isn’t any more complex or unique than theirs.</p>

<p>On other threads, you have indicated that without your properties, your income is in the $130K range. That being the case, your eligibility for any federally funded need based aid (which is what FAFSA computes) is really not anything…except Stafford loans. Your child might be eligible for institutional grants depending on the cost of attendance at the schools.</p>

<p>Again…good that you are looking at these options early in the process. It gives you and your family time to consider all aspects of the college application process. As others have said…cast a wide net…look for schools that will offer merit aid to your son (read that thread by momfromtexas). There is a terrific school for your child out there…more than one.</p>

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<p>Reinforcing what sk8rmom says.</p>

<p>Your son is likely to get into some very good schools with his stats. But the question is whether you’ll be able to afford them since your EFC is apparently much higher than you you can afford to pay.</p>

<p>And so you need to prepare both yourself and your son for what’s likely to happen depending on where he applies.</p>

<p>SUNYs—only “need-based” aid you’ll get is unsubsidized Staffords, but you should be able to afford them since you’re instate. Geneseo may be a (low) reach, but is worth applying to, Fredonia and others that have been mentioned are likely matches. Some, not all, SUNYs have Honors programs that may come with serious merit money. Your S is not a shoo-in for them at the higher ranked SUNYs.</p>

<p>Privates where your S’s stats are around the 50% of enrolled students: Your S stands a good chance of getting into these schools, but your EFC will likely mean no FA except for (unsubsidized) Stafford loans. If there are merit scholarships available, your S will likely NOT receive one of them since merit scholarships are used to recruit students whose stats are WELL ABOVE the college’s average stats. Usually merit goes to students at or above the 75% for the school. Usually the higher a given student’s stats, the more the merit award is. Likely senario for April 2011: You telling kid, "We’re happy you got into College XYZ, but we really can’t afford to send you there because it will cost $40K+.</p>

<p>Privates where your S’s stats are above (or well above) the 75% of enrolled students: Your S is very likely to be admitted to these schools, but your EFC will likely mean no FA except for (unsubsidized) Stafford loans. But if the school offers merit awards, he’s competitive and may very well get one. The probability of award depends on the college and its rules for giving out the merit: At some schools (such as Niagara U), he’ll likely qualify for an automatic merit award based on his stats. At others (such as College of Wooster), he’d still be competitive since his stats are near the top of the 25-75% range, but how big the award would be would depend on how much the college wanted him instead of another student.</p>

<p>You might also want to look at the threads on automatic scholarships, full-ride scholarships, and schools known for good merit aid. Those may help you identify how high up/down the rankings/tiers your S should be looking if he needs merit aid.</p>

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<p>Well unless some of these places are lying about where their incoming stats are, that certainly isn’t the case. You are making him sound like an academic failure, which I don’t find helpful</p>

<p>Good heavens, NO! You completely misunderstood where I was coming from.</p>

<p>You started this thread based on your high EFC based on your assets. maybe I was wrong for guessing that that meant that you didn’t want to pay the full-freight that colleges would expect you to pay. You will NOT get any financial aid with your high EFC. </p>

<p>So, I was suggesting that if you want to pay less than $50k per year, your child will need to look at schools where his stats will be in the upper part of the top quartile. Kids in the mid-range often get little or nothing for merit scholarships. The “mid-range” is that range that schools report on various sites. Your child needs to be well above that range to get decent merit money.</p>

<p>The point isn’t whether your son can get accepted to higher tier schools, the point is that he won’t get merit money at this point. However, if merit money is not desired, then no problem. :slight_smile: But, if merit scholarships are wanted/needed, then he needs to look where his stats are very high for the school.</p>

<p>You said that these were his stats:</p>

<p>*Our son has a modest 91 average right now. He hasn’t taken the SAT yet, but on the practice tests he is getting around 1250 CR/M and 1980 total, so he is not in superstar territory. *</p>

<p>If he scores about a 2000 on his SAT, then the Tier 1 schools that give merit aren’t going to give him much if anything. You mentioned Cornell, Cornell doesn’t give merit scholarships. What other Tier 1 schools are you talking about? </p>

<p>The reason I mentioned looking at some good Tier 3 & 4 schools is because I thought you wanted generous merit - something in the $20k per year range to bring down your costs to about $25k-30k per year. (you need to include room and board costs, not just tuition)</p>

<p>However, if your son scores above a 1400 M+CR, there are some second tier schools that would give him big merit. </p>

<p>I guess I don’t understand what you want. How much do you want to spend each year? I thought that you didn’t want to spend $55k per year.</p>

<p>*I don’t think M2CK is saying that he wouldn’t be admitted to the higher ranked schools and no one is trying to suggest that your S isn’t a bright, successful student. But this thread has evolved from a discussion of how high the EFC will be to other ways to make college costs affordable, which is essentially merit aid. So, she’s trying to give you a method to look for big merit money and this has been an effective strategy for many people in the past. *</p>

<p>Exactly! No one is saying that your child won’t get ACCEPTED to higher ranked schools. But you have to understand that if your child’s stats are in the mid range or just within the upper quartile for the school, he won’t likely get much if any merit money. Schools tend to target their merit money at the students who are in the upper part of the upper quartile (about the top 10% of the school).</p>

<p>When you see those ranges that schools report, that means that those students are below the top 25% of the school. That confuses some people.</p>

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<p>Thumper: If a person owns a fractional interest in property that he CANNOT sell that property has little or no value. The value of any piece of property is what a willing buyer and a willing seller will pay. You could test this by listing the fractional interest for sale and see how many offers you get. The value of a home is market value. If there is no market…</p>

<p>If for example land is tied up in a trust that stipulates that all the owners, each of whom owns a percentage, have to agree before sale, that prohibits individuals from selling. If land cannot be sold, it has very little market value.</p>

<p>There are land situations in which you might ‘own’ the property but someone has a life estate, meaning they have the legal right to live in the house for the rest of their lives. You can sell the house but the new owner cannot move in since the life estate owner is still entitled to live there. Obviously that affects the value of the house. </p>

<p>Land situations are a lot more complicated than just comps in the neighborhood.</p>