<p>Well, what do the 800k in assets consist of? </p>
<p>That is a highly unusual situation. Few would ever have such a low income with such high assets. Do the assets generate NO MONEY? Is it just land that sits there? </p>
<p>I can see that the NPCs would give different results, but ACTUAL results may be similar once the schools see what those assets are. If the asset is the family home with no mortgage, that may get a different consideration than 800k of cash sitting in a savings acct. </p>
<p>There are families who have very low income but have inherited family land or the family house. My friend got a very expensive paid for house as part of her divorce settlement By living on a HELOC, her income was very low for a number of years. Her home equity basically paid for her house and other living expenses. Her EFC was very low and her kids got full PELL and full state grants. AT schools that used FAFSA only, they were eligible for all kinds of financial aid. That was with a father who made over a half million a year and had millions in assets since FAFSA excludes his financial and primary home equity.</p>
<p>My MIL has land that just sits there. Should be sold but she is adamant in keeping it, so for now she pays to keep it. </p>
<p>it’s not unusual to have a paid for house through various means-parents paid for it, an former marriage paid for it, an inheritance was used to buy a home outright. In such cases, it’s important to find out directly from the fin aid office whether primary home equity is capped. When you own, say a million dollar house, that cap can make a huge difference if your income is low. Uncapped, that’s an asset that can give you a $50K EFC right off the bat and that’s if a school uses the FAFSA 5% hit which they are not required to do with some using different percentages. In some areas, a million dollar house is not luxurious. My brother lives in a very, very simple ranch that is valued at that amount, a house not much bigger than a double wide trailor home. Very simply made too, no high end extras. It’s the location that makes it so pricey.</p>
<p>So those living in high priced homes with high home equity, can look for schools that cap that value at say 1.2X income or 2.4X, both figures I’ve seen. Maybe not include home equity–don’t know of any such school offhand. </p>
<p>Sumobats…I don’t find it astonishing AT ALL. The schools that give generous need based aid use the Profile. It does NOT have a simplified needs test at all, meaning those assets would be taken into consideration. In addition to possibly considering primary home equity, the $800,000 assets could easily generate a family contribution of $40,000.</p>
<p>In addition, most schools have the caveat for generous aid that the family have “typical assets”. More than 3/4 of a million dollars would likely exceed typical.</p>
<p>I read the article as it was a family that had home equity of $800k, but had suffered a job loss and had very low income for THAT year.</p>
<p>I don’t think that is an unusual scenario at all, especially in a high real estate state like NJ. It was probably a guy who had been an executive making $200k, bought a home in the 1990’s for $300k but had increased in value to $1M and so has $800k in equity now. Some schools care about the equity, some don’t, so you are going to get different EFCs.</p>
<p>
“Will” is a strong word. They may or they may not. In 4 years, we’ve never been asked for that data, possibly because we are not on the line or in any grey area, we’re just high EFC.</p>
<p>Some financial aid offices may add back certain deduction and depreciations taken on tax returns. It all depends on the schools, and also the type of business involved. When a parent owns a business, the NPCs are often undependable because of the way a number of PROFILE schools use info other than the 1040 AGI for income and count business accounts and resources as assets.</p>
<p>^Other than depreciation, I’m curious about what they would likely add back in for rental property.</p>
<p>Some folks deduct expenses that would be things families would have anyway…a portion of a car, meals, costs related to the rental that are regular maintenance and would need to be done regardless. It is very hard to say…because really it depends how the rental owners deal with their property. </p>
<p>When I owned a rental out of state, I deducted my trips to that state for dealing with the rental. My guess is that some of those costs would have been added back in for college financial aid purposes.</p>
<p>
Somehow I find it a stretch that a financial aid office would sit there with $57,000 in receipts and ferret out the things we did that “would need to be done regardless”.</p>
<p>They don’t…but you do have to send them all of your schedules…which I believe includes your deductions.</p>
<p>Look…there is no question that for some folks business expenses for rental properties are added back in. It might be that their rental income is a business, and other expenses related are what is added back in.</p>
<p>Ask some of the business owners who have kids who applied to. Boston College…apparently BC adds back in some of these costs.</p>
<p>
No one has ever asked for our schedules. Posters are always throwing out the “they’ll add stuff back” caution, but I’ve yet to see anyone clearly state: “we had to submit schedules and then they added back the refrigerator” or anything like that. </p>
<p>We had to submit our entire tax return including all schedules to both Santa Clara University and to Boston. University. In fact, for BU, we had to submit two years of taxes as part of the financial aid application process.</p>
<p>@sylvan8798 </p>
<p>The issue may not be much for rentals…except for depreciation and maybe gas/trips. I don’t think CSS schools provide a written list of what gets added back in unless really pressed for details. The info just doesn’t come with the FA award. </p>
<p>I think the issue is more for the self employed/independent contractors. A Columbia Univ parent was quite upset two years ago here on CC when his wife’s Realtor deductions were largely added back in. I can’t remember if he was given an itemized list of what was added back in, but the additions increased her income by over $25k.</p>
<p>Another parent, (can’t remember the school) complained that her H was self-employed and the school added back in the “employer portion” of FICA. </p>
<p>Various things that seem to be subject to being added back in…car leases, some gas, cell phones, deductions related to allotting a portion of one’s home to the business as an office, meals, car insurance, employer portion of FICA, etc.</p>
<p>This is just a guess, but I suspect that schools are also wary of business owners who deal with a good bit of cash (restaurants, dry cleaners, nail salons, etc) claiming small incomes, but living in nice homes, having substantial savings, etc. </p>
<p>And, merit aid won’t fluctuate based on income change over the 4 years. Need-based aid will fluctuate depending on how many are in college at a given time as well as parental income. </p>
<p>^Of course, this can also be a negative if merit aid is a set dollar amount and doesn’t increase with increases in tuition/fees/etc.</p>
<p>I would recommend those who have an expensive home, for example, but low income, to call the schools on the lists about how the primary home is treated if PROFILE is required. As if the home value is capped and if it’s 1.2x, 2.4x income or some other cap, and what it is. That can make a difference for that category. Specific questions can also be specifically answered. General ones, will get general answers. </p>
<p>For those where it would make a difference, that could trim down the college list. </p>
<p>Also, it’s always good to be aware of what fin aid offices may do with your business info so you do not get blind sided as some students and families have. If you have a family business, and it has not blown up your fin aid prospects. well and good. Could be the type of business, could be the schools you dealt with, etc, etc. Doesn’t mean others should not keep this in mind. </p>