<p>Okay, so my mom jointly owns (50%) a small business. The market value of the land/real estate is around $375,000. However, the business has less than 100 employees, so for the section where it asks "As of today, what is the net worth of your parents' investments, including real estate (not your parents' home)?" do I include that $375,000? Also for the question that asks "As of today, what is the net worth of your parents' current businesses and/or investment farms?" do I include it there also? </p>
<p>I'm really confused and my parents don't know either. :/</p>
<p>EDIT: After talking with my aunt, she says that it's not an investment, and the small business exclusion makes it so that I don't count it in my parents' business assets, right? If someone can confirm this for me, that'd be great.</p>
<p>If the land/real estate is in the name of the company and is part of the company’s assets, it would not be reported. You are correct that with fewer than 100 employees, business assets are not reported. I assume the land/real estate is the building that houses the business. If this is the case, its value is not reported. You can put 0.</p>
<p>I’m not sure if the small business exclusion applies here since your mom doesn’t own/control more than 50% of the business, as it sounds like that’s what is required for the exclusion. Perhaps others here will shed some light on that.</p>
<p>I found this “If the small business is a partnership where each partner owns exactly half of the business, and the family is one partner and a third party is the other, it does not qualify for the small business exclusion.” So I would report the full $375,000 for the business assets? Will this severely hurt my chances of getting financial aid?</p>
<p>I would say yes because, for FAFSA, it could raise your EFC by almost 6% of the $375K each year. But FA varies widely among colleges so it may or may not make a huge difference in your actual awards. For example, if your EFC without the business assets is already higher than what would qualify for grants, it doesn’t really matter because all that you’re likely to be offered is loans anyway. Do you have an estimated EFC without the business?</p>
<p>Using the quick efc calculator, without business assets it’s $7,293, with it’s $11,016.
It just kind of irks me that if my mom owned one more percent of the business my EFC would be 4k lower…</p>
<p>Do you think I would still qualify for grants with an EFC of $11k?</p>
<p>That doesn’t look right to me…adding $300K in assets would certainly raise your EFC by more than $4K. You might want to check it against the EFC Formula Guide:</p>
<p>What is your parent’s AGI from their tax forms? Is it possible that you’ll qualify for the simplified formula that excludes assets? </p>
<p>If your EFC is already at $7K then it’s too high for federal grants but you may qualify for some state aid and/or institutional need-based grants if you applied to private schools. Do you have information about those programs for the college(s) you applied to?</p>
<p>Finally, is there any possibility that your mom could increase her share in the business by 1%?</p>
<p>Our AGI is $91,967 and both my sister and I will be in college next year. And my mom is in a partnership with my aunt for the small business and I read that partnerships don’t get to exclude business assets, so I think I don’t qualify for the exclusion.
I applied to Harvey Mudd College, Williams College, Emory University, Georgia Tech, and Clemson. I know HMC meets 100% of the demonstrated need, but I’m not sure about the rest. I know the financial aid at Williams and Emory is great though.</p>
<p>For my top three colleges (HMC, Emory, Williams) the deadline to turn in the FAFSA and CSS is February 1st, so I think it’s too late. :’(</p>
<p>I’ll sit down with my aunt and mom tomorrow and make sure I fill out that EFC formula guide to make sure though.</p>
<p>If it’s not a family-owned business, you do have to report the value. That value may be offset by business debt:</p>
<p>Business or Farm Debt</p>
<p>If a business or farm does not qualify for one of these exclusions, the net worth is reported as an asset on the FAFSA. There is a separate question for such businesses and investment farms, as the net worth is adjusted to shelter part of the value of the asset.</p>
<p>The net worth is calculated by subtracting business or farm debt from the current fair market value of the business or farm (including the value of land, buildings, inventory, equipment, machinery and livestock). To be considered a business or farm debt, the debt must be secured by the business or farm. If the debt uses something else as collateral, it does not offset the value of the business or farm.</p>
<p>Oh, good point…in reading the op again, it does sound like the $375K is the full value of the land/building and they would only need to enter the mom’s share of the business value!</p>
<p>So, a business owned by family is not reported, but because it is a partnership the assets are reported?..Would like to hear the logic behind this.</p>
<p>Also, “small business” can be up to 100 employees. Any business with 100 employees is not so small…lol</p>
<p>Not sure of the logic … I would be completely bonkers if I tried to understand why things are done as they are in the federal aid formula! It’s just the way it is, and the regulations Congress writes in the Higher Education Acts have to be followed as written.</p>
<p>^ you would think a third party as a partner would make it more complicated to get a loan for college costs, sell assets, ect. Anytime a third party is involved it complicates things.</p>
Will this severely hurt my chances of getting financial aid?</p>