<p>It sounds like that financial aid favors someone owning a home vs renting. Your asset get “protected” when you own a home and if you rent, your asset won’t. Is that right?</p>
<p>it is not the issue about the capital gain or not. It is about the difference between fixed asset and liquid asset. When your asset becomes liquid (when you sell), you will need to contribute rougly 5.6% as mentioned here as oppose to zero if you keep the fixed asset (which is the home). Am my assessment correct?</p>
<p>Your assessment is correct at FAFSA only schools. At schools that use Profile (most private colleges that meet need) home equity is usually considered. There are some schools that don’t consider it at all and some that cap it at a multiple of income or using some other measure, but most will want some of your equity.</p>
<p>Wondering if you can help me understand how financial aid school and government programs would distribute/award financial aid to a freshman under these 3 situations:</p>
<ol>
<li><p>On tax return, No income except small amount of interest and bank accounts that cover essential living expenses but live in a multi-million dollar home (according to county tax assessors).</p></li>
<li><p>If in the 2nd year (as sophomore), a home is sold. After the free $500K for married couples, tax return shows over million dollars. </p></li>
<li><p>Parents own more than one home but the same financial statements as in #1.</p></li>
</ol>
<p>I think this is how it would play for FAFSA, which is where the government programs draw their info from. For schools, it might be different under 1 & 3 if they use Profile and do consider equity in the primary residence.</p>
<ol>
<li><p>House is not reportable asset for FAFSA. Source of interest income (bank accounts, etc.) is reportable, subject to parent’s asset protection allowance.</p></li>
<li><p>Income would be reportable and other types of assets purchased with income would be reported as well. I don’t think there is a $500K exclusion for FAFSA…it would probably be counted as untaxed income.</p></li>
<li><p>Primary home is not reported for FAFSA. Net value of second home is reported as an asset. (I would not use the assessor’s estimate of my home’s value at any time. Use comparable sales and deduct for any potential selling cost, as if you were actually going to sell your home that day, to get the net value.)</p></li>
</ol>
<p>Btw, not to be snarky but you do realize that government aid is usually given to those with low income and few available assets, right? I’m not sure it’s going to apply in this scenario, even under 1, if there are enough interest bearing accounts to allow the parent to support a multi-million dollar home on the interest alone. </p>
<p>You can play with the EFC calculators at fafsa4caster or college board. For federal grant eligibility, EFC must be under $4619. Even with a 0 EFC, the federal grants top out at $8000 for a freshman (Pell and ACG) next year. Pell is awarded on a graduated scale.</p>
<p>Though for Profile schools–those top private schools most CCers want to attend–it’s a whole different story. They will delve deeply into the situation you describe, folks with little income but significant assets, and expect you to leverage the assets to pay their bills.</p>
<p>Weren’t you the one asking about contributing millions to get in?</p>
<p>Are you talking about the FAFSA only? The FAFSA takes NO information about your primary residence…value or mortgage or equity…nada.</p>
<p>For the schools using Profile and their own forms that USE home equity…the home equity WOULD be assessed per the school’s formula. It varies by school.</p>
<ol>
<li>On tax return, No income except small amount of interest and bank accounts that cover essential living expenses but live in a multi-million dollar home (according to county tax assessors).</li>
</ol>
<p>If your interest is THAT high it is unlikely that you are eligible to file a 1040EZ or 1040A. Right?</p>
<p>Well…if your interest in the bank accounts cover your “essential expenses”…the balance in those accounts must be plentiful. You do know that the balance in your accounts is also counted as an asset…not just the interest. If you have been living off of the interest from an account…and that somehow vanishes before you fill out the finaid forms, I would think the finaid department would wonder what happened to all that money. </p>
<ol>
<li>If in the 2nd year (as sophomore), a home is sold. After the free $500K for married couples, tax return shows over million dollars. </li>
</ol>
<p>If you have $1million dollars on the tax return…don’t expect to get any need based financial aid. It doesn’t matter what the source of that income is…you won’t get need based aid. Did you think you would or should?</p>
<ol>
<li>Parents own more than one home but the same financial statements as in #1. </li>
</ol>
<p>Second home IS counted as an asset in all cases. The value of that home must be listed on the FAFSA AND the Profile. I believe it’s the equity that is fully listed. It is considered an expendible asset and will be counted as such by the schools. Aid will be affected by the ownership of a second home.</p>
<p>The fact that these “scenerios” depicts a real estate wealthy family with NO income other than interest would likely be a red flag for the finaid folks for verification. The things to consider…how would a family with NO income amass savings significant enough to live off of the interest with no income noted. Ditto the ability to have a $1 million dollar home profit. Ditto owning a second home.</p>
<p>Sounds like a family who has invested their resources in things other than college and expects someone else to pick up the tab. Choices…choices.</p>
<p>Sorry…I don’t think it’s going to be an easy road to hoe. Now if this individual was able to qualify for the simplified needs test…no income, able to file 1040A or 1040EZ…then assets would not be reported. </p>
<p>But with the amount of real estate you are mentioning…it sounds like someone is trying to game the system. I’m sorry if that is not the case, but is sure feels like that.</p>
<p>This poster 123q is also posting about applying for Questbridge. Does Questbridge REALLY take students who live in million dollare homes??? Please tell me the answer is NO…Please.</p>
<p>
This is a very unlikely scenario. A fully paid for multi million dollar house will still be expensive to run as it is unlikely to be a one bedroom shack with no electricity or running water. There has to be money somewhere to run it (some sort of income or assets). Any financial aid officer with half a brain will see red flags popping up if someone claims to be living in a home like this but says they do not have any income or savings to run the home. And yes they do have the authority to investigate such obvious discrepancies. </p>
<p>
With over a million dollars on the tax return what do you think will happen? On FAFSA it would produce an EFC of 99,999 (the highest the FAFSA EFC can currently go). No financial aid obviously.</p>
<p>
See answer to #1. Multiplied by the fact that it is even more unlikely as more homes means even more money to run them.</p>
<p>
I remember a post from a couple of years ago where a financial aid officer had a student whose parents had $20,000 in interest on their tax return but reported no assets on FAFSA. After a meeting the FAFSA was adjusted. The next year the parents no longer had any interest or assets, but the student magically had a large amount of interest on his tax return - again with no assets. They were not happy with their financial aid.</p>
<p>Thanks sk8rmom for your explanation and reference to calculators. Federal method shows parents and student contribution = 0. Institutional is much higher. </p>
<p>Wondering what real estate doesn’t have U.S. known value. How is that entered? </p>
<p>I think I have to fill everything out myself, since it isn’t possible for parents to fill out the forms. So, I’m sorry about these questions. </p>
<p>thumper1: I don’t personally own real estate. Just because parents own something
doesn’t mean they will give it to you (or that you will eventually get it) because you are their child. </p>
<p>hmom5: Other family might help financially if needed if they could be convinced that it was guaranteed and worthwhile.</p>
<p>sorry the message to
hmom5 was in reference to donation. What i meant is other family could make donation to school if convinced.</p>
<p>For those with questions & comments:</p>
<p>If I was really trying to deceive, why would I be completely honest about the situations? </p>
<p>Why can’t I try to find out how I can support myself?
I can’t help places I live?
I personally don’t own homes & real estate. I personally don’t have accounts.</p>
<p>I’m trying to see if I can get to college without parents & family?</p>
<p>My entire life isn’t tied to my parents and other family.
I want to see what I can do on my own, since I likely won’t get help from parents.</p>
<p>
</p>
<p>In this country…the financial aid system for undergrads IS tied to the parents. The income AND assets of your parents IS going to make a difference in your need based financial aid situation. The schools don’t really care if your family WANTS to give towards your college education, they only care if they CAN…and if the parents CAN do this (by the school’s calculation…not the family’s), the expectation is that the parents WILL contribute.</p>
<p>And it is almost impossible to be declared independent from your parents for financial aid purposes as an undergrad. </p>
<p>You are wise to be getting answers to your questions now. You need to find out how much your parents ARE able and willing to contribute to your college education. If they say a small amount…then you will have to adjust your college list to include schools which are financially attainable for your family and you.</p>
<p>There is virtually no way to hide assets…and it would be dishonest to do so. As mentioned above, financial aid is for students with significant financial need. </p>
<p>Not wishing to criticize your situation…but I truly hope that a family with a million dollars in assets is NOT going to receive federally funded or school funded need based aid.</p>
<p>P.S. It is considered FRAUD to complete a FAFSA with inaccurate information or by not including assets the family truly has. In other words…if you didn’t put your account balances down but listed your interest (interest is on your tax return)…well…you could lose not only any financial aid the school offers you but also risk losing admission to the school. Not saying that is what you had planned…just warning that this would not be a smart move.</p>
<p>thumper1:
I was never planning on being dishonest which is why I am giving honest info about situations. I don’t know everything owned. I don’t know U.S value of things that I do know of, so I was wondering how to calculate–since I will have to fill everything myself. </p>
<p>I appreciate that you are giving advice that you feel will really help and warnings. I think you are, because you want to help prevent any trouble. </p>
<p>But I wouldn’t do anything dishonest. People who would do that would have to carry that burden the rest of their life and it could never be erased or forgiven from their heart</p>
<p>123…are you an American citizen? Are you living in the U.S?</p>
<p>What we are trying to tell you (a number of us) is that with $1 million dollars worth of assets, your need based financial aid will likely be zero…none.</p>
<p>Your family sounds like it has chosen to invest its money in things and that is a good thing. However, college isn’t free…and perhaps some forward planning for THAT should have been considered as well. </p>
<p>You need to talk to your parents. Perhaps they are considering selling something to help finance your college education.</p>
<p>thumper1:
I wasn’t born here but U.S. citizen living in U.S.
I don’t think parents will finance college, because they only help sons. daughters don’t matter and kicked out of home. I don’t know how to put U.S value on things and don’t know if I miss somethings. What would you do?</p>
<p>123q, if you are international, FAFSA does not apply to you. It also sounds like you are mostly interested in Profile schools, which again, look very hard at parent assets.</p>
<p>As Thumper explained, the US system, which many see as unfair, expects your parents to pay for your education. Whether their money is in real estate, stocks and bonds, under a mattress or is cash in the bank–the colleges see it as their responsibility to make sacrifices, cut back on lifestyle and pay their kids’ way through college.</p>
<p>Many kids have other relatives who contribute, and it sounds like you have some who are able. So instead of convincing them to make a big donation to get you in, why not settle on a college you can get into on your own and ask family members to help pay for it?</p>
<p>Whether your parents plan to help pay for college or not they are required to provide their full financial information for both income and assets. This includes all assets and income in any country, not just in the USA. The value of any non US assets would be its actual value converted into US dollars on the day you are filing FAFSA.
If you are completing FAFSA you must get this information from your parents . But one of your parents must get a FAFSA PIN and sign FAFSA which is their way of saying that their information is accurate. Only the person whose PIN it is is supposed to use that PIN to sign FAFSA so a parent must do that. If for some reason they are unable to do the electronic signing (using their PIN) then they would have to sign a paper FAFSA and send that in.</p>
<p>oh, sorry I wasn’t clear with the msg
but not sure what “eligible noncitizen” means.</p>
<p>The FAFSA website says
To receive federal student aid, you must meet certain requirements. You must:
- Be a U.S. citizen or eligible noncitizen.
[FAFSA</a> - Free Application for Federal Student Aid](<a href=“http://www.fafsa.ed.gov/faq003.htm]FAFSA”>http://www.fafsa.ed.gov/faq003.htm)</p>
<p>from what swimcatsmom wrote, is my understanding correct that
my parents need to sign FAFSA. If that is not possible, then I cannot apply?</p>
<p>hmom5:
I appreciate your advice to try get other family help for college instead of donation. </p>
<p>I try not to ask for help or bother other family or people. I try to do everything on my own, since everyone is so busy and not always in U.S. So, I need to try/research first to see if I find out how to get to college on my own. Then maybe I can ask other family, but I think they might like to see their name better if that is what is done for donations. Well–I’m not sure, because now I remember they like to give anonymous donations. Thank you.</p>