This past Fall I took the semester off for personal reasons and during that time took a sales internship at a company that provides a loan packaging service. Turns out I have a talent for sales and ended up having the highest performance of anyone at the company (so maybe 20-30 people, nothing ridiculous). They told me they wanted to hire me, I said I needed to finish up school before working full time but would be enthusiastic about working 1099, commission only from school. I negotiated a contract with them to do just that and we agreed on terms that I’m very happy with and that should result in my income being fairly substantial (hard to say exactly when you’re commission only, but based on my past performance 40-50k/year should be doable).
Here’s the twist: I’m currently paying $0 in tuition. I’m estranged from my mother so I’m able to waive the non-custodial parent profile requirement, and my father has no income. My school (UVA) has a policy of meeting all demonstrated need so they covered everything in grants. I imagine my aid will be similar for the 2017-2018 school year because my income in 2016 was only ~10k.
With all of the above in mind, I have two questions. First, how will my increased personal income affect my financial aid for my final school year, (2018-2019)? Second, what can I do to mitigate any potential increase in my EFC? I’ve heard, for example, that the FAFSA/CSS profile doesn’t take into account contributions to a student’s retirement fund. Is that correct? If so, are there any other things like that that I can do to reduce my expected contribution?
If you filed FAFSA for 2017-18, you used 2015 income. For 2018-19, you will use '16 income. If that’s your last year, you should be fine. I don’t know how UVa uses CSS or what it asks about current year income.
The 2018-2019 FAFSA will use income from 2016. If you had substantial income in 2016, this could reduce your aid for the 2018-2019 school year.
Any money in your account the day you file your FAFSA will be an asset. So you might want to pay your bills before you file your FAFSA.
BUT you will have good income to offset that reduction in aid, if any.
Since you can complete your taxes for 2016 anytime now…maybe once that’s all done, go have a chat with financial aid at UVA, and see what this will mean.
Depending on your actual income, your contribution might not go up very much. They will be able to tell you.
Does UVA also require the Profile for continuing students??
ETA. Congratulations on this great job opportunity. It’s not a bad problem to have earned money! Yes, you may have to contribute some to your final year at UVA, but you will have the income to do so…and potential savings.
Your assets will show up on the FAFSA as well as the Profile.
@Sam998 you will want your assets to be as low as possible on the dates you file the final fafsa and Profile forms.
But really…you will HAVE the income information…how much did you actually earn in 2016? That is the amount that will be used on the 2018-2019 forms.
@thumper1@oldUVAgrad@twoinanddone thank you all so much for your advice! I didn’t realize 2018-19 would only take into account income from 2016, that is such good news. Regarding the assets, if I were to set up a single person LLC and keep my money in there would that be taken into account by the financial aid department here? I was reading about the small business exclusion on FAFSA and that’s been my understanding so far but I think I need to look into it some more.
@thumper1 I don’t have my exact figure yet as my dad is handling my taxes for me and hasn’t completed them yet, but it should only be like 10k for 2016. My worry was that income for 2017 would be taken into account and I’m glad to hear that’s not so!
Hate to be the bearer of bad news but student’s earned income/assets make an enormous difference. I make over 40k in the summer alone thanks to tech internships, and while that isn’t yet reflected on my FAFSA thanks to it still drawing from 2015 info, I made around 22k in 2015 and my EFC increased by over 10k because of that/probably mostly because of the assets that I have now.
@CourtneyThurston I was worried about this! From what I can gather from others who have posted is that my income in 2017 shouldn’t be a problem due to my final year of school being 2018-2019. As for assets, do you know if setting up an LLC could be a viable solution? I’ve never done anything like this but from what I can gather, the FAFSA has a small business exemption and my employers would likely be willing to pay an LLC I set up due to my being an independent contractor.
You are confusing income and assets. If you set up an LLC (and what would the purpose be, to store money?), it’s an asset. Don’t you think everyone would open an LLC if it could easily be done to avoid reporting assets?
If you earn $40-50k in 2017 and it is all sitting in your bank account when you file the FAFSA, it will be an asset. If you (through your father) are Auto $0 or simplified assets, it won’t matter. If you do have to report assets, it will matter. Could your FA drop $10k because of that asset? Maybe, but you’d still have $20k+ of your earnings (after taxes).*
Remember that you’ll have to pay taxes on everything you earn, including the employer’s portion of SS. Make sure you make quarterly payments. You may not have to since it is your first year of earnings, but do it so that it is not sitting in your bank account on ‘FAFSA day.’
*I do not know if CSS has a Auto $0 or simplified asset provision. UVa uses CSS so you might have FA drop even if your FAFSA EFC stays the same.
@twoinanddone “Don’t you think everyone would open an LLC if it could easily be done to avoid reporting assets?” Yes! But I have no way of knowing what other people are doing on their financial aid applications and thus had no idea if this was currently happening or not. From what you’re telling me it does seem I’m mistaken about this approach.
yea, I get killed by taxes, it’s true. The flexibility of being 1099 is worth it though!
Could you tell me more about the auto $0 provision of FAFSA? Am I automatically auto $0 if my dad has no income? I will have to look into it more as it pertains to the profile
I don’t think there is an automatic $0 provision on the CSS. There were questions regarding assets of parents and assets of the student. You should be very proud of your accomplishments! Even if you have to pay for some of your college in the last year, you can now afford it and have a bright future ahead of you! Congratulations!
I do think your best bet is to complete your 2016 taxes…and then make an appointment with UVA financial aid. Discuss this with THEM. They might be able to give you an estimate of your contribution for your final year, based on the 2016 income.
You will then have this information, and will know how much younneed to contribute from your earnings and savings for your final year of college.
@mommdc based on what you folks have told me, I don’t think the 2016 income will be much of an issue. It seems the bigger problem is the money that will be in my savings account when I do the FAFSA/CSS for my final year. I’ll update though!
A common strategy is to buy supplies/furniture/etc that you’ll need for the school year anyway in bulk ahead of time so the money isn’t there on FAFSA day. But if you have like 50k sitting in your account, that strategy isn’t going to do a lot for you.