Financial Aid Crisis

Paying for College
1

<p>So on my FAFSA, it showed that I had an EFC of 1226 and it was selected for verification. </p>

<p>So I submit my UCLA Verification form and my parent's tax returns. I got an email from the UCLA Financial Counselor. These are their exact words..</p>

<p>"According to your parent’s Federal tax return (Schedule E), your parents own properties. On page 3 of the Verification Form, you did not report any. We need the CURRENT market value (a good resource is Zillow - Real Estate, Homes for Sale, Home Prices & Values ) and your current debt owed on the property. The current debt can be found on a current mortgage statement."</p>

<p>However, I replied to them, saying that according to my parents, the properties have been sold in 2010 and I provided Schedule E worksheets for further verification. </p>

<p>And then I check my Financial Aid Summary, and it shows that my parents have to contribute at least 25k for my education. </p>

<p>Is there anything that can explain the jump of the EFC besides making a mistake on the FAFSA?</p>

2

<p>If your parents owned the properties in 2010 and sold them, where did the money from the sale go?</p>

3

<p>It doesn’t necessarily sound like a mistake. Colleges will expect parents selling property to set aside some of the profit for their children’s college costs.</p>

4

<p>The sale of your parents’ property is considered income (after subtracting any mortgage that was paid off.) For instance, if your parents sold the properties for $400k and they owed $100k on them, then they had a profit of $300k from the sale and that needs to be reported.</p>

<p>Why didn’t you include the “profits” from the sale of these properties on your FAFSA???</p>

<p>What happened to the profits from the sale of these properties?</p>

<p>Your parents must have made a good profit since your EFC jumped a lot.</p>

5

<p>sounds odd that you neglected to include the proceeds from sale of real estate…Hard to hide any kind of cash without a school finding that out…</p>

6

<p>The net profit from the sale of the property is considered income. That would most definitely increase your EFC.
Too bad they didn’t sell it the previous year.</p>

7

<p>I am confused. If the properties were sold, I think there should have been a schedule D for the capital gain or loss, not just a schedule E worksheet. I suspect that there may have been no net profit.</p>

8

<p>There would have been other forms that would have needed to be filled out even if the actual sale resulted in a loss…OP did you send all the forms for verification? If you did, then your parents need to go back and check their taxes, if they used tax software correctly, open and print all the forms and resubmit. Schedule E would only show the rents not the sale (if the properties were rental) Form 4797 is probably what you need (but again ask your parents) as it is for depreciated property and the gain or loss would have carried over to the 1040. The transactions probably will show up other places as well…</p>

9

<p>Does it make a difference if it’s being sold or foreclosed? If so, how?</p>

<p>It seems that my dad gave me the wrong information and immaturely said they were sold, while my mom says that they’ve been foreclosed.</p>

10

<p>It makes a huge difference. Sold would mean you would likely have income to report, which to schools is like cash in the bank. Foreclosures would probably lower your EFC, but you will have to provide proof of actual foreclosure. If they are being foreclosed on, but not yet complete, they are still assets in the school’s eye.</p>

11

<p>

Totally not true. The gain would be calculated on the difference between the purchase price, plus improvements, less accumulated derciation and the sales amount. What is owed on the property is irrelevant.</p>

<p>Foreclosure would make a big difference. Since any forgiven debt could result in taxable income. You need to send all the schedules to the school, not just schedule E.</p>

12

<p>^^^</p>

<p>Thanks for catching my mistake…I was thinking equity.</p>

13

<p>Whatever happened to the properties has to be shown. All that the school knows is that you had properties and they are not being shown as an asset. You have to show the disposition of them and what you got, if anything for them. </p>

<p>You may have a problem if the properties are in the process of foreclosure. They may have value on paper though not realistically, and untill the actual foreclosure proceedings are over and the properties out of your parents’ names, no longer theirs legally, that value will be an asset as far as the college is concerned. It may be to your benefit to take a gap year and let this all blow over if there are such issues on the table right now.</p>