Hello. I am a junior that will be applying to colleges this fall. However, my parents own a small business and I think that will greatly decrease the amount of financial aid I get, especially since I want to apply to some private liberal arts schools that require the CSS Profile. I know that FAFSA doesn’t require small businesses to be listed but are there other options for me?
Are you possibly a competitive applicant for merit aid someplace? That is NOT income dependent.
How much aid do you need to attend college per year?
What can your family afford? You need to sit down with your parents and discuss your college budget. Your parents business is a family asset and some schools (rightfully so) will consider it in determining what your financial need is. The option for you is to find schools that are affordable to your family.
Net price calculators on college web sites may not be as accurate, particularly if they do not ask about whether income is from a small business.
What you may want to do is run net price calculators twice for each college:
A. with normal values for income and assets.
B. with pessimal (for financial aid) assumptions – income before business deductions, high valuation for any business related assets.
If the net price from A is unaffordable, it is unlikely that the college will be affordable. However, if the net price from B is affordable, it is likely that the college will be affordable. If the net price is between A and B, then it is more uncertain than normal if the college will be affordable.
The other thing about businesses…there are deductions the IRS allows for tax purposes that the college add back in as income for financial aid purposes.
Also, what is your parent income? All this discussion of the business and how it affects your aid might be a moot point…depending on their income.
In addition, the formulas for awarding need based aid vary wildly from college to college…but the vast majority do NOT meet full need for all students.
I have a 3.97 unweighted GPA and a 4.72 GPA weighted. I got a 33 on my ACT and I’m ranked in the top 5% of my class so I think that can help me get some merit scholarships. My parents’ income, excluding the business, is pretty low, low enough that I think I would get significant need-based financial aid if they didn’t own the business.
But they own the business, and if it generates income then that counts toward your EFC. You can’t separate it out (business and nonbusiness). If your parents take business deductions, some of those may be added back by colleges when they calculate your EFC.
‘I have a 3.97 unweighted GPA and a 4.72 GPA weighted. I got a 33 on my ACT and I’m ranked in the top 5% of my class so I think that can help me get some merit scholarships’.
CHECK OUT THESE LINKS TO SCHOLARSHIPS
Is the business their only source of income? Can you give a ballpark estimate of what they declare for income taxes (adjusted gross?)
@123Mom456 Colleges should rightly include income from a small business including adding back in certain deductions but the problem for some families is business valuation. The business itself is an asset but the catch is if it is liquidated, there is no longer an income stream because the two are tied together. It can also be a catch if the business is only valuable if the skills of the owner are present and thus can’t be sold for Fair Market Value.
What is the family GROSS income. Then…what is the adjusted gross income.
With your stats you can get good merit aid. Just be sure to apply to schools where you will be among the top candidates. That will not be the most competitive schools, but there should be a fair number of good schools. Be sure to look well past brand names and colleges that will impress your friends, who, after all, are high school students who probably only know about a handful of schools, and don’t know necessarily which factors equate to good education and career preparation.