<p>I hate the AMT!!!</p>
<p>Thanks, Calmom for the explanation about the different impact assets/income have on FA. My D has a friend who is bummed by the whole process--she worked throughout high school and summers at a job that she didn't particularly like and saved her money. She was shocked to see how her own savings affected her FA award.</p>
<p>Oh, the system is particulary hard on students who work, especially those who work to support themselves.</p>
<p>My son has been out of college since age 20, working full time & living on his own. He's been earning about $24K a year - and has saved up about $10K. He is age 23. </p>
<p>So take 50% of his earnings -- $12K, and 35% of his savings - $3500 - and you've got a $15,500 EFC -- more than 100% of his savings. Add to that the fact that he must be treated as a "dependent" - despite living on his own for 3 years -- and have my income considered as well.</p>
<p>The one group that the financial aid system discriminates againt the most is teenagers and young adults with a strong work ethic -- the more the kid works & saves, the worse it gets. The problem is because of the double assessment of earnings + assets -- the kid who has twice as much in savings from gifts accumulated from rich grandparents would only have a $7K EFC.</p>
<p>Laffytaffy, I hope you will let us know how this comes out. I don't know if this would help, but it occurs to me that your situation (in terms of college affordability) is not much different from that of any other student who had a precipitous drop in income from 2005 to 2006, and there are already exceptions made for some instances of this (such as parental job loss). Anyhow, best of luck, again.</p>
<p>thanks, for sure I'll post a result ASAP</p>
<p>CPA and/or parents really blew it on this.</p>
<p>I understand College Admissions from A to about Q or so.</p>
<p>I only understand Financial Aid from A to about G. But even with that degree of knowledge, it's clear that realizing a major capital gain in the tax year before starting college is a MAJOR RED FLAG item about which parents and CPA should have educated themselves before proceeding.</p>
<p>I feel bad for the OP. I hope some sort of appeal works. But "being nice" has nothing to do with it: parents blew it, big time, out of ignorance and lack of due diligence.</p>
<p>Wish we could know what the parents' thought process was. We don't have enough info. For example, if we are talking real estate assets, waiting a year while the market is poised on a downturn could have cost more money than the $20K financial aid for year 1. </p>
<p>I wonder why the brother's education debt had to be paid off entirely right then. Did the $$ come from a loan shark or something? Would have been nice to have kept out the first year tuition for OP. Oh well...good luck!</p>
<p>
[quote]
But even with that degree of knowledge, it's clear that realizing a major capital gain in the tax year before starting college is a MAJOR RED FLAG item about which parents and CPA should have educated themselves before proceeding.</p>
<p>I feel bad for the OP. I hope some sort of appeal works. But "being nice" has nothing to do with it: parents blew it, big time, out of ignorance and lack of due diligence.
[/quote]
Agreed, but could this help. Earlier someone mentioned a gap year ... to me that is more than what is needed. Can the OP ask Penn to defer an ED admission for a year? And then when you defer admission could s/he reapply for financial aid using 2006 income and asset info? If that works the OP could still be headed to Penn, the financial aid will be based on their parents typical income, and the only residual impact of the asset sales would be the 5% "tax" on the remaining balance on the gains ... which should yield a financial aid offer similar to the orginal offer.</p>
<p>{{The reason we sold the property was to pay for my oldest brother's debt from college loans and, irronically, to also pay for my future UPenn bills.}}</p>
<p>I think one fact is being overlooked: If ops parents are not taking out loans etc, this yr. because they can afford to pay the full amount, the profits are being used for his Penn bills. I agree it was a stupid financial decision, however, why should any family be allowed to reap large real estate profits but still receive govt or possibly UPenn endowment funds that could be used for more needy applicants?</p>
<p>"Actually failure to be able to afford to attend a school due to insufficient financial aid IS an out from ED."</p>
<p>It's an out IF AND ONLY IF the school releases you. (though most will release you, provided it is not to a perceived confederate/competitor. (i.e. state school, etc.)</p>
<p>(And if I am the school, it seems to me that the capital gain IS fair gain. It may not be "nice", but it is "fair". It is, after all, supposed to be "need-based aid".)</p>
<p>Laffytaffy,</p>
<p>I think it would not be giving you false hope to let you know that Penn is a 568 school, which reportedly uses the Consensus Methodology to deteremine financial aid. A link to the 568 President's Group reveals the following information about one time income issues, which I believe agrees with what Calmom has suggested:</p>
<p>. One-time Income Adjustments </p>
<p>Recommendation: Exclude certain non-recurring income. </p>
<p>Discussion: Families often request that the income used for need analysis be reduced to reflect non-recurring income. Such income might include certain capital gains, withdrawals from pension plans, IRA rollovers, or unemployment income. We suspect that most 568-type schools already reduce need analysis income by documenting one-time-only income and we recommend that this practice be incorporated into the Consensus Approach. Specifically not included would be over-time and bonus income unless the parents employer can document a related change in company policy. </p>
<p>For more info about the Consensus Methodology:</p>
<p>Good luck!!</p>
<p>Another link to the 568 Schools is here:</p>
<p><a href="http://www.568group.org/%5B/url%5D">http://www.568group.org/</a></p>
<p>oooh thanks</p>