I’m not sure if it was filled out incorrectly, but the EFC I got in the email for fafsa was 200,000+. Our income isn’t that high but we do have a lot of assets but not all are paid off yet. If schools use the EFC by fafsa, I’m afraid I won’t get any financial aid.
What’s the net worth of the reportable assets?
When you and your parents do the FAFSA did you use the IRS Data retrieval tool to upload your 2015 tax information directly from the IRS?
Are your parents self-employed or own a business
Does your family own a farm
Does your family have real estate other than their primary home?
If yes, do they collect rents?
If your FAFSA EFC is $200k, that will represent the minimum that schools believe that your parents can afford to pay based on their income/assets. The CSS profile will take a deeper look at your parents income and assets.
Please have a realistic talk with your parents regarding how much they are willing to pay/borrow for you to attend college. With a FAFSA EFC, you will most likely have to pay full cost at pretty much any college in the country.
You may be better served looking for schools where you are a viable candidate for merit $$ to help bring down some of the costs.
It sounds like either you either have a lot of valuable assets, or you made a mistake.
What IS your family income?
Did you put parent income into the student section as well as the parent section?
Did you misplace a decimal point on an entry making something like $10,000.00 read $100,000.00?
Did you put the balances IN tax deferred retirement accounts as assets?
You need to read every single line of the fafsa and look at every single entry.
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we do have a lot of assets but not all are paid off yet.
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Did you subtract the mortgages on those properties?
Do those properties bring in any income? Was that also counted?
What is the income from jobs?
What is the income from assets/properties?
What is the net worth of assets/properties MINUS what is owed/mortgages?
Frankly,
Even if you made a mistake, unless the mistake was HUGE HUGE HUGE, then your EFC will still be too high for need-based-aid at 99% of schools.
Even if your real EFC is - say - $75k…that’s way too high for aid at 99% of schools.
How much will your parents pay each year? ASK THEM!
If they won’t pay all of college costs, then you need an application list that includes merit scholarships
One possible problem is you might have listed your parents income under student as well.
Our family income is <40,000 to put this into perspective.
My parents saved a lot of money over the years to buy a few rental properties instead, but I didn’t subtract the mortgages from the assets value. But wasn’t there a box for total money still owed? I filled that out which was approximately half the value.
When colleges make financial aid packages, do they weight assets just as heavily as family income?
That does not matter. The rent from the properties is income and needs to be supported on the FAFSA. Any property outside of your residential home is an asset and gets counted on the FAFSA (if your family has a few properties, that is what is inflating your EFC)
The equity in those rental properties would be considered assets. What is the equity?
And the rental income…is income.
HOWEVER…you say your income is less than $40,000 a year? Gross income? Any chance you qualify for a means tested benefit like free or reduced lunch…or SNAP? If so, your family might qualify for,the simplified needs test…if income threshold is really that low.
If you qualified for that, your assets would not be counted.
However, there are questions ON the fafsa that cover this. Sounds like you do NOT qualify.
The family income includes rental income. I’m not sure what equity is. I don’t have reduced/free lunch because we never applied although I just looked up that income would be within the range to receive it. But I assume I wouldn’t qualify at all if you add in the assets.
Equity…THE amount the property is worth minus the outstanding mortgage amount.
So…if the property is worth $500,000 and you had an outstanding mortgage of $400,000, the equity would be $100,000.
free lunch is income dependent, not asset dependent.
If you qualify for free/reduced lunch by household income, you should apply. Do you have younger siblings?
Because parents would have to report income from rent and have mortgages for which they are writing mortgage interest off on a 1040, it is highly unlikely that they will meet the simplified needs test even if Op does gets free lunch.
If OP is really Penn pending, they will request the CSS profile which will take into consideration the value of the rental properties along with rents collected
If the income is below the threshold…AND the student qualifies for free or reduced lunch…the student would meet the simplified needs test criteria.
The tax form used is only one of three criteria that must be met in addition to lower income.
So…total lower income PLUS one of the three following items.
- Able to file 1040 A or EZ. This is not likely with rental properties.
OR
- Parent is a dislocated worker (OP didn't mention this.
OR
- Qualifies for a means tested benefit like free/reduced lunch or SNAP.
But as noted…Penn is a Profile School. There is no simplified needs test for,the Profile. All assets WILL be counted.
^yes that would only help for schools that only use FAFSA.