My sister is currently a rising senior and is buckling down on the college search process. However, cost is a big issue for our family, so my parents have been running net price calculators on all the colleges she is interested in to see if they would be affordable. Recently, they learned that the calculators are much less accurate for them due to the fact that they own a small business. Our finances aren’t great and my parents are both first generation immigrants with very little knowledge of the college search process. My sister and I were hoping that those on College Confidential who are more informed than us could give us some assistance.
Is there any way for us to get an accurate EFC from net price calculators? My parents are planning to fill out a practice FAFSA in order to get an estimate but all the colleges my sis is interested in require the CSS Profile. I know that all colleges have different formulas to calculate aid based on the information provided by the CSS Profile, but is there any way for us to get even a rough estimate? Or do we just have to wait and see what happens with aid?
How much can they pay each year for 4 years?
No there is not. Because schools have their own method and formula with dealing with that and it is not built into the NPC, likely because it is tricky or takes judgements. The FAFSA EFC will just tell you if you get a Pell grant or not, you can’t use that number for CSS colleges unless you want to consider it a minimum you would likely have to pay.
People say some deductions can be added back in, so you could add in ones that relate to higher standard of living like car allowance, cell phones and I don’t know what else. You should also add any contribution to retirement plan to income (for anyone).The value of the business itself would be another issue though.
The most important question that needs to be answered is what your parents WILL pay annually for college costs.
If the school calculates a family contribution that is within that price point…fine. If the school calculates a family contribution that is more than that price point…it’s not going to work.
So…find out what your parents WILL contribute every year towards college costs.
What kind of business is it? Does the business (or your parents) own real estate associated with the business? Other than family members, how many employees does the business have? How much depreciation was taken last year by the business? How much (if any) was expensed for business use of the home? How much was deducted as a contribution to a retirement plan? How much was deducted as contribution to health insurance?
@Madison85 About 10-15k per year
@BrownParent Okay, thank you for this information. I doubted it would be possible but was holding out hope.
@thumper1 I understand. My parents have been notoriously cagey when talking about finances. However, after reading the countless threads about students whose parents didn’t give them a number and allowed them to apply to unaffordable schools, my sister and I forced our parents to give us a number which was 10-15k a year. They don’t want to limit our college search or options. My dad even has elaborate plans about how he would be able to pay for more than that. However, our finances aren’t good and my sister and I don’t want to be disappointed at the last second. Since we likely won’t have an estimate of EFC, she is planning a large list with the hopes of finding merit aid. I will most likely do the same when I apply to college next year.
@arabrab My parents own a gas station. My dad works there (my mom stays at home) along with about 10 other people. No, just the land the gas station is on. Does that count? I don’t have answers to the other questions at the moment but I will ask my parents and hopefully return with answers.
Yes the land the gas station is on will be included in the value of that business.
Looks like you need to build a merit seeking list, since your parents will not give you enough information to do anything with net price calculators.
See http://talk.collegeconfidential.com/financial-aid-scholarships/1678964-links-to-popular-threads-on-scholarships-and-lower-cost-colleges.html for various lists of schools to consider.
@ucbalumnus My sister only recently started pushing them to open up about our finances and they’ve been slowly giving her the appropriate and necessary information. They really don’t understand the college search and application process and how important the financial information is when crafting an application list. We’ve been trying to educate them about financial aid and everything and I honestly think they will be more open with us soon.
Right now, my sister is planning her list around a search for merit aid. Although she doesn’t have an account on here, she has found those threads very helpful and has found some great options! But, my parents want her to apply to more reach schools. However, she doesn’t want to do that only to be disappointed when the finances don’t work out if she gets admitted. I think they don’t like the idea that their finances will limit our college options. However, that is the reality of the situation and we want to go into the search with our eyes open.
Here is a hypothetical though. If they did provide us with all the information about their financial situation, would we be able to use the net price calculators? I thought they couldn’t be considered accurate since we owned a business. Could we add back in deductions or do something else to get a more accurate idea through the net price calculators?
In that hypothetical, you can run the NPC twice for each school: once with “normal” numbers, and once with “pessimal” numbers (adding back all possible business deductions, generously valuing the business and any real estate that is owned) to get a range of estimates for each school. Even then, remember that reliability of the estimates is lower than for simple family finance situations.
The other thing to consider with need-based financial aid is that if your parents’ income is highly variable, then there could be a lag between changes in income and when that is reflected in the financial aid that you get. This can result in a cash crunch if income drops.
@ucbalumnus Thanks for the information! We are planning to just focus on a search for merit aid, but it is nice to have this info.
Key: Find out the approximate value of the gas station land (I think you said that they own the land, not the building)
Your county assessor may be able to give you the estimated market value of the land only if you call them with the address. Be sure that it is land only, and ask for help figuring out the market value. (Market value is NOT the same thing as Assessed Value.) Commercial property is really tough to value, so this is probably the easiest route.
Then, you need to get your folks to figure out how much they owe on the land.
The difference between the value and how much they owe is their equity in the land. Many colleges that use Profile will count this as an asset. Depending on where you live, it might be a big asset or a little asset. Whoever owns the land under the gas station on Pacific Coast Highway in Malibu has a huge asset. That same size chunk of land in South Dakota might represent a much less financially significant asset.