<p>The answer is that “yes, assets can reduce your financial aid”. The operative word is “can”. But not always.</p>
<p>There are a lot of things that go into getting financial aid. it usually starts with federal aid. You fill out the FAFSA. Bear in mind that the only thing that the FAFSA does is come up with an Expected Family Contribution number, the EFC. That number is used for FEDERAL money. With an EFC lower than a certain thresh hold, a student can get PELL grants. You are not likely to qualify, certainly not with the info you have given. Also some state funding and some federal funds that some colleges subscribe to also use that EFC. If the COA, or Cost Of Attendance, which is the official number that a college submits to the government is greater than your EFC, that amount is defined as need and can be met with financial aid, which includes subsidized loans, work study and very limited grants. A student can borrow even without need through STafford Loans up to $5500 freshman year, if the COA supports that and if there is need up to $3500 can be subsidized. Parents can borrow, again , up to COA less any aid and scholarships . Most schools also use the FAFSA as their financial aid application and will accept the model that COA minus EFC equals need. But very few schools, in fact, I believe none, guarantee to meet this need, and do so only for their most desired students. So even though you get a big fat need figure by reducing assets and getting you business situation valued at very little, and have little income, most of the time you get the need without the money to meet it. The EFC, for most, represents the least they can expect to pay unless a big Merit award comes into picture exceeding need, or the cost of the school is lower than EFC. </p>
<p>Your buildings will be assets for purposes of FAFSA valued at what you could NET for them if you sold right away. Any liens or mortgages on them wojuld reduce the value. That they are now worth less than you paid for them matters not one bit, except that the number you would use for their worth is less than what you would have had to use if they had retained their value or become more valuable. For FAFSA, the value of the buildings would be 5.6% of what their immediate sale net value would be if you have exceeded your asset allowance. Parents have a set dollar, at least $40K of assets that are excluded and that amount depends upon the age of the older parent and the number of dependents. </p>
<p>As others have said, the parental EFC is cut in half with 2 kids in college with each kid’s personal EFC added to it. If your kids have money sitting around, I recommend you set up an college savings account in the parent’s name and SSN but joint with the kid and have the money sit there if the amounts are not a lot and you want your child to have access to that account to pay her expenses. S/he can deposit into that account reimbursing you for the some of the expenses she is incurring. You do this because FAFSA hits a kid up 20% directly with no asset protection whereas a parent is assessed at 5.6% after protection. If there are a sizeable amount of assets, then a 529 might be the way to go. Also bear in mind that the day you fill out the FAFSA and other forms is what is used for the snapshot of your assets. You don’t want to pick a day when your accounts are flushed with your paycheck or you have some insurance money that you are going to using to pay some bills, because none of that is taken into account. You have $10k in that account with outstanding checks of $8K, balance is still $10K not $2K. If asked to verify, you will need to show account balances and they don’t want to hear about outstanding checks or what the money is earmarked for. It is a moment frozen in time and the stories don’t count.</p>
<p>PROFILE is a whole other story. Schools that tend to be more generous with aid, including those that guarantee to meet full need, define the need themselves. They often request an additional form called CSS PROFILE. UVA, one of the few state schools that meet full need, uses PROFILE. Unlike the FAFSA EFC, the contribution numbers that can arise from PROFILE can and do differ widely from school to school. Some include the value of your cars, many expect a certain set amount from the student, and they may evaluate business assets differently. If you own a business, that can be an issue with PROFILE. Small business owner can be hit very hard with the way a school looks at the business as an asset. PROFILE also usually includes the value of the primary home which is excluded by FAFSA, though various schools do cap that value by different amounts, usually at 2.4 X income. PROFILE also looks for NCP info when there are is a divorce or other such situation and at assets of the other children in the family. IF you thought EFC stood for Every Friggin’ Cent, well, you ain’t seen nuthin’ yet. PROFILE wants it all. They want to know the value of your retirement plans though they usually won’t use it, only if they think it is excessive. They want to know if Grandma is thinking about paying. They want to know if even think there is other money that might be coming in, never mind what you outright have. And PROFILE schools do not tend to split things 50/50 with two kids in college, as others have said. </p>
<p>So, getting money for college is not easy. Many of us who may qualify for some financial aid end up a lot of time with just enough at private schools so that they cost a little more or less, really the same as the state options. And being poor and needy is no panacea either since the school that tend to meet full need are the hardest to get acceptance and for most schools, all that is guaranteed are the federal monies which will pay for a commuter at a state school.</p>