<p>Income.
The FAFSA looks at the family's after-tax adjusted gross income for the most recent tax year. Some self-employed parents try to artificially depress their income to maximize aid, but colleges are increasingly wise to the tactic. Syracuse University in New York last year received an application from a student whose father, a car dealer, reported an income of only $9,000. He turned out to have substantial assetsand the student got no university aid. </p>
<p>The way divorced parents' earnings are calculated can also lead to disagreements. The FAFSA and College Board profile ask only for custodial parents' income, which means stepparents can be on the hook. Aid officers say they get many complaints from stepparents who may, for instance, be supporting their biological children. Maureen McRae Levy, director of financial aid for Occidental College in Los Angeles, ignores the prenuptial contracts sent in by angry stepparents. "Pre-nups don't erase my rules or their ethical obligation," she says.</p>
<p>The 568 Group will try to address these controversial blended-family decisions by gathering financial information from all parents and stepparents, then leaving it up to the aid officer to decide which two parents' income should be counted.</p>
<p>Beware of trying to hide investment income. The 568 Group also may reduce aid to families whose reported investment income seems too low given the size of their reported assets.</p>
<p>Expenses.
The FAFSA exempts income that is needed to pay for a family's basic living expenses. The modest federal allowance ranges from nearly $13,000 after taxes for a single parent with an only child in college to, for example, about $21,000 for a family of five with two kids in college. After that, the feds expect from 22 percent to 47 percent of a family's additional income to be available for college expenses. The College Board's profile gives families more for basic expenses, allowing almost $15,000 for the single-parent family and more than $24,000 for the family of five. It also exempts some medical spending, savings, and education expenses. </p>
<p>The 568 Group promises to be even more generous. It will add to the College Board's allowance a geographical cost-of-living adjustment for residents of high-cost cities like New York and San Francisco. </p>
<p>Assets.
After exempting all home equity and up to $75,000 of parental savings, the FAFSA asks parents to spend no more than 5.6 percent of what's left of their nonretirement assets each year. Students are expected to contribute 35 percent of their savings annually. The College Board exempts as little as $14,500 in nonretirement savings but asks families to spend no more than 5 percent of all other assets on tuition. It takes 25 percent from students' savings and expects freshmen to contribute an additional $1,150 in summer earnings.</p>
<p>The 568 Group will strike a middle path between FAFSA and the College Board by capping the home equity available to pay for tuition at 2.4 times the family's income and asking the family to spend no more than 5 percent of available assetsincluding the student's savings.</p>