Financial Aid with Self-Employed Parents

Paying for College
21

<p>Scottaa’s message is consistent and makes sense. </p>

<p>He says you can look at a particular college’s financial aid policies, published data, and known track record…
…then look at a student’s profile (academics, talents, etc.) and gauge this student’s strength as an applicant by comparing him/her to the other students who are accepted at this college…
…then make an educated guess about what kind of aid package the student might reasonably hope for at this college (Lord willing and the creeks don’t rise…)</p>

<p>I think this is very practical, and it doesn’t show any misunderstanding of how financial aid works. Maybe it is confusing to some because it’s a heuristic approach?</p>

22

<p>An example of a “generous” school that makes no promises is Earlham–meets average of 96% need, and explicitly states that it does not leverage financial aid for enrollment purposes, as befits its Quaker heritage.</p>

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<p>Keilexandra, I don’t have personal knowledge about Earlham or its practices – so I can’t comment – but most colleges do leverage. </p>

<p>Boston University has an excellent chart on its site that shows how aid at BU correlates to class rank and test scores:
[Boston</a> University - Office of Financial Assistance - Applying for Financial Aid](<a href=“http://www.bu.edu/finaid/apply/incoming_probability.html]Boston”>http://www.bu.edu/finaid/apply/incoming_probability.html)</p>

<p>I’ve seen aid packages from a wide variety of schools and there is no way that they can be correlated to the statistic that says “average percentage of need met” if there is not a guarantee to meet full need. It doesn’t make sense for a college to decide that they are going to meet 95% of everyone’s need – they would be at a competitive disadvantage with the 100% need schools for their very best student. The students at the top end of the applicant pool would have better offers elsewhere and that’s where they would go. </p>

<p>Earlham’s CDS shows that they offer merit aid as well as need-based aid, so it may be a matter of labeling. It was often hard for me to tell with my kids’ aid packages what was designated “merit” and what was “need based” – since for us the need was always bigger than the amount of merit aid, merit awards were generally subtracted from the total. So we’d typically see an award with several grants with different names. My son had the type of stats that put him at the top of the applicant pool for most of the colleges he applied to – so we saw a lot of pot sweetening with an extra $5K scholarship thrown in.</p>

<p>The truth is that schools that leverage can often be VERY generous to students who they want to attract – the fact that they have freedom to leverage gives them some flexibility with their financial aid budget. And at most schools it isn’t going to correlate all that well to grades and test scores, because other factors come into play. Does the college need more women? more men? Does it want to widen its geographic base? Does it need to attract more students who are strong in sciences? </p>

<p>So one way that a student can take advantage of leveraging is to go against type – that is, apply to schools where he or she will stand out from the applicant pool as the kind of student that the school wishes it had more of. My son was offered -0- aid from one college that claims to meet 100% need, even though they acknowledged that he had need – and he was offered very generous aid from an equivalently ranked, very similar college that was more honest with the way it reported its stats. So why did my son get -0- at college A? I think both colleges had similar aid policies: they tried to meet full need of students for whom aid was awarded, but each year the admitted a handful of needy students who were simply turned down for aid. College A. fudged its data and claimed to meet full need, simply by including only the students who actually were given aid in its data. You would have thought my son was a better “fit” for college A – but that is exactly why he got no aid from them – he lived too close, he looked exactly like all their other applicants, he would have fit right in but added nothing; to college B he seemed like a prize: opposite coast, under-represented gender, strong background in math & sciences at a LAC that was strong on arts & humanities. </p>

<p>But if you tell me that there’s a school out there that has a strict policy of only meeting, say, 95% need for everyone… I’d want to drop that school from the list, because I’d take that as a guarantee that need will NOT be meant. That is, I think its better to take one’s chances of being part of the majority of students who get 100% need at an all-or-nothing type school, then be sure that the aid award will come up short at a school with the philosophy of distributing the pain equally.</p>

24

<p>I can’t seem to find the source now, but I remember being surprised by an official (as in website or print propaganda) declaration by Earlham that it did not participate in preferred packaging of need-based FA. Merit aid would of course be a different matter.</p>

<p>On the other end of the spectrum, Muhlenberg openly acknowledges the leveraging game and is very honest with prospective students.
[The</a> Real Deal on Financial Aid](<a href=“http://www.muhlenberg.edu/admissions/aid.html]The”>http://www.muhlenberg.edu/admissions/aid.html)</p>

25

<p>We are a middle class family with self-employment income. Before allowing our daughter to apply ED to Williams I asked some very specific questions of the financial aid office. I’ll admit being nervous that it would all work out but the package was very generous. Williams is several thousand dollars less than our instate publics would have been. I wish people wouldn’t wholly dismiss the concept of applying ED with need. At a small number of schools it can be the very best option.</p>

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<p>It is not a matter of whether or not a college decides they will meet a certain percentage of need. It is a matter of statistical patterns. The financial track records are indicators of a school’s behavior, not their intent. </p>

<p>And just like in any statistical study, you will have outliers like your son’s example of getting nothing with need at a 100% school. That is why student’s always should apply to at least six schools if not 10. If you spread the risk of a statistical anomaly amongst many applied schools, then the statistics work in your favor.</p>

<p>And you are correct, schools leverage. 60% of the private schools leverage, and 30% of the public schools. But whether or not there is a committee at a college actively directing financial aid dollars towards the students they want, it will still show up in patterns over the population and time. These patterns will materialize in those financial track records. When you combine those patterns with an individual student’s relative class rank (through ACT & SAT scores most of the time) and their EFC, you can come up with a very reliable indication of how much money that student should expect; or at the very least, you can predict which schools will be more generous to that student than others.</p>

27

<p>Yeah, Calmom…I’ve done a ton of research on NYU. While I feel my D will hover at about the top 5%…it will be close. BUT…she’s going for an audition type major (vocal performance)…so I know how “tricky” their aid is…they lump it all together and call it whatever they want (merit, talent, need, etc.). But I don’t think it’s going to be enough, no matter what. $60,000 - $25,000 (the top I’ve personally heard anyone get) just won’t cut it with our income. But…we’re still gonna apply and see what happens.</p>

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<p>Keilexandra, here’s the info you mentioned about Earlham: [Earlham</a> College | Financial Aid](<a href=“http://www.earlham.edu/~sfs/]Earlham”>http://www.earlham.edu/~sfs/). </p>

<p>Earlham’s approach: “Our goal is to disseminate our limited funding equitably across need and ability levels…”</p>

<p>Thanks for this pointer.</p>

29

<p>We own our own business (full C Corporation). My only advice is to keep good, honest records and make copies of everything you submit to the school financial aid department. Don’t try to adjust the numbers—it is what it is. My S will be a senior this year. Each year we have completed the FAFSA and the school’s FA supplement. Each year we have gone through the “verification process” and we’ve been asked for additional information. There’s a little more effort required on our part, but he’s been rewarded with a very fair FA package.</p>

30

<p>Thanks for this post. I remember 30 years ago when I went to college, like one of the above posters, all my dad’s income went right back into the business, paying the rent/mortgage on the building, utilities, employees’ salaries, etc. We of course got no financial aid. After living on campus full time for two years, I finally got a small grant and work study for my third, which luckily became my final year. I was out of money.</p>

31

<p>I would not have been able to attend my college of choice at all if I had not had a half tuition merit scholarship and worked full time at the cafeteria to feed myself. Of course, that was a long time ago, and the tuition was an eighth of what it is today.</p>

32

<p>I have a similar question:</p>

<p>my dad owns a company in which he is the only employee. It’s a very, very small company that makes around $30,000. Since it is incorporated, and pays my dad as an “employee,” will the money the company takes in be used? or the money that he is paid through the company?</p>

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<p>I think your daughter should go for it – but just be very clear up front with her about the money. </p>

<p>I think its a long shot. I also think that in the arts world, NYU/Tisch is over-rated – not that there is anything wrong with NYU, but that there are many other schools with very strong programs, that are more under-the-radar, where a performing arts major would do well. </p>

<p>I don’t know anything about how Tisch allocates aid – it’s just a guess on my part that they are going to throw their money at talent, not SAT scores - even though the scores and GPA are important for admission purposes. But the curriculum is performance oriented, and the school overall is better off if it attracts & keeps top talent. </p>

<p>But the bottom line is if your daughter wants a career in the performing arts, she is going to spend her whole life doing long-shot auditions. She has to be able to put forth her best effort, again and again, no matter what the competition – and emotionally shrug off the losses when someone else gets picked. My daughter is not an arts major – she applied to Gallatin – but she has an arts background as a dancer, and I think all of those years of auditions helped her keep emotionally grounded throughout the process. </p>

<p>The point: there’s no reason NOT to apply and see what happens. If I am right about Tisch, then if your daughter blows them away at her audition, she might make it. There aren’t any “stats” for vocal that you can post at CC on a “chances” thread – it really just is a matter of the quality of your daughter’s singing at the audition. </p>

<p>I’d note that the dancers from my daughter’s west coast high school who had their hearts set on Tisch and didn’t get in, ended up at Suny Purchase, where they were very happy with both the quality of the program and the tuition. (Obviously anyone who plans a career in performing arts needs to avoid taking on massive debt).</p>

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<p>gregb, the money he is paid through payroll for the company will go to the AGI numbers on his tax return. Monies left in the company, retained earnings, will not count on the FAFSA only schools. Schools which want the profile may count the business as an asset, may add back in any expenses from the business, etc. The profile schools will generally reinterpret tax returns. FAFSA will take the AGI.<br>
Note: this is in my experience. S Corp owner and two kids in college.
I did not read all the posts here and understand there are varying opinions and scenarios.
YMMV. YOUR MILEAGE MAY VARY.</p>

35

<p>It IS very confusing. Here’s Colombia’s statement regarding how it determines aid eligibility: “Columbia determines family income by reviewing federal tax documents. Total income is based on the Adjusted Gross Income listed on the federal tax return plus all untaxed income (i.e., tax-deferred pension contributions, social security benefits, child support received, tax exempt interest).”</p>

<p>There simply is no mention of taking the AGI and ADDING THINGS (phones, travel, normal business expenses) BACK IN.</p>

<p>I’m going to count on the worst-case scenario. This information has been really helpful and is leading me to be cautious.</p>

36

<p>My parents own an advertising agency, so it looks like they make a lot of money, but I have two older brothers in college and they hardly get any FA. I’m looking at private small liberal-arts colleges, and I’m afraid I wont get too much sympathy for my situation, because on paper we look like we’re alright on our own. I’m worried that since my brothers dont really get much money from their schools (but they ARE public, so it may make a difference), I wont either.</p>

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<p>

That was our experience. Husband owns an S corp. Disappointing finaid outcome at privates that meet 100$ of demonstrated financial need.</p>

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<p>If you are counting on a certain amount of financial aid, if you need aid, do not apply ED. I say this because you cannot compare packages and you just don’t know what you may get unless you are in a very clear financial position. It can be a real pain to get out of ED and then it may have been your best package. You just don’t know until you compare packages. Also, schools are permitted to use their money anyway they please so how they view your financial situation is entirely up to them. It also depends on what the situation is at the college. They do not have to be consistent from year to year. Or even person to person.</p>

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<p>hi did anyone tell u about FAFSA</p>

<p><a href=“http://www.fafsa.edu%5B/url%5D”>http://www.fafsa.edu</a></p>

40

<p>My daughter applied to quite a few top schools last year (mainly LACs) and, even though their financial aid pages said they went by taxes, when I called and asked directly about self-employment, I was often told they did add figures back in. Our full need was assessed differently (as much as 100% difference) but they were all doable (except for one school that asked for more information but, by then, she had ruled that school out). I estimated that the worst I would get would be based on the business’ gross earnings. No school was quite that bad. The no-loan schools actually calculated our contribution higher than schools that usually award loans. The school that is <em>good with merit awards</em> gave her a generous merit award-- and a bunch of loans to meet the rest of our need. Several schools that usually award loans packaged her without any and those schools ended up having better packages than schools that advertise they meet 100% with no loans. Also, some schools waived or reduced deposits because she was a Pell Grant recipient. I am glad we applied widely. She did apply somewhere ED (was deferred then rejected) but it was a very generous school with a webpage that clearly spelled out awards. As a matter of fact, the financial aid office sent us their award (even though she was deferred) and it was amazing.</p>