Hi this is my first post on CC so I apologize if I post incorrectly. The situation is this: my dad “co-owns” a sub chapter s business (not self employed) so our aggregate income is extremely high because company money is reflected within the income. My parents aggregate income as a result is roughly two times their actual wages, significantly increasing our EFC. When I recalculate EFC based on wages only, it is much lower. Given the inflated aggregate income I was unable to qualify for financial aid, but my parents can’t afford a $60,000/yr school. I was wondering if there is any body else in a similar situation and if I could email/call the financial aid office for a school I am considering? Sorry if its vague.
Are you adding in the S corp net income or gross income? Unfortunately, his share of net income shows up in his tax return as income whether he can withdraw it in cash or not.
I would have to ask. net income? i think
If your parents can’t afford a $60,000 a year school…there are plenty of options that cost far less than $60,000 a year.
Find some of those.
@BelknapPoint your thoughts?
I have no expertise on the business revenue/owner profit subject, so all I can do is echo your advice: set your sights on the colleges that you can afford.
I understand. I am a senior so I am trying to decide between schools now. I was just wondering if there was any way to make a case for (more) financial aid. My EFC is almost 60,000/year, but that is because the aggregate income - including net profit from corporation makes it look like my parents make over $400,000/year but that is very untrue.
So…how much DO they make? Even if they make $200,000 a year…you likely won’t get need based aid at most places.
That net profit from the business is your parents’ net profit. Do you really think colleges would,give need based aid to help support your parent business?
Did you expect to receive need based aid?
Do you have affordable acceptance options?
This aggregate income issue is going to come up EVERY year…and there is no guarantee it will be resolved in your favor all four years.
I do have options that are somewhat affordable (technically still expensive but all schools are). And it was more of a hope for aid than an expectation, but I have an older brother in college and they have no money saved. Thats beside the point. Regardless, the thing that bothers me is that based on all other conditions staying the same if the aggregate income is $400,000 then the calculated EFC is $60,000, but if i change that to $250,000 it is reduced to $30,000. I’m speaking hypothetically bc that would be more realistic of our situation. Its whatever i guess - I’m sure a lot of people run into the situation. Oh well.
That $30,000 EFC for you is only because you will,have. Sibling in college at the same time. When will your sibling graduate?
$250,000 a year income is FIVE times the national family average income…just FYI.
My brother would graduate one year before me so… 2020.
That last year…you will be full pay then.
@thumper1 I completely understand. My parents don’t actually make even that much because my dads earnings are taxed based on the $300,000 + so my parents pay around $90,000 in “income” taxes every year from about $210,000 in actual income … so after taxes about $120,000 which I know is still high.
Your after tax income doesn’t matter. Everyone pays income taxes.
I am sure there is a college that is affordable for your family.
@thumper1 yes thank you I am aware of that. And not really, no matter what ill have about $60,000 with of debt but thats better then $240,000 worth of debt
Did you apply to any affordable choices?
Kids in this situation need to choose colleges with lower price tags (in-state publics) or schools that offer merit scholarships that are easy to get given their academic profile.
I applied to one in state and an oos public with decent merit aid, but at 26 and $30,000 respectively even those are pricey, but thats a matter of college its self being too expensive all the way around.
If you think $26k is too much for your family to pay, exactly how much do you think they can or should pay?
Setting up a business as an S corp is an election, an option. Aiui, often used to minimize taxes or simplify reporting, in some way. But the salary he takes is just a portion of the profits he and his partners make, right? There’s the rub. All biz owners working for their own entity are actually working for themselves. Self employed.
The fact he chooses to take a lower salary doesn’t change the money he made. If “company income is reflected within the income,” it’s still attached to him.
This affects smaller biz owners more than you. Families barely pulling any monies.
What is your in college brother doing? Didn’t your family deal,with college finances last year at this time as well?
My point in the last post is that college is too expensive for the majority of people out there. I know for a fact that my parents really can’t help me out much but I AM NOT suggesting that because of that colleges should give me a ton of financial aid. Going back to my original question ALL i wanted to know is that based on the inaccuracy of our aggregate income if it would be feasible to talk to a financial advisor at one of the schools i applied to (that would cost 65,000/yr) to see if it would be possible for more aid than the $0 they gave me. Thats ALL I was asking.