<p>Hello, I am going to apply ED to cornell next November and i would like to know if in calculating aid, cornell (or other colleges) take into consideration money put away in iras or in the value of the home. My family income is around 50000 total, and our savings is about 25000, with these statistics we our contribution is estimated around 7000, but my dad has a ira for around 400,000, and our house which is almost fully paied off is another 400,000. It would make a huge diffrence if they factored these two things into the formula.
Thanks</p>
<p>hopefully sblake or scott will chime in.</p>
<p>Cornell uses their own institutional methodology to calculate aid and uses the CSS profile and the FAFSA to do this. The money that your parents have in savings in addition to the equity in their home may have an impact on your EFC depending on the age of your parents. </p>
<p>Private schools that require the Profile do consider home equity, however. BUT-- a large number cap the home's value at 2.4 times the parents income .</p>
<p>the money that is already in the ira is not counted toward calculating your EFC but the amount of money contributed to the ira is added back in to your parent's income.</p>
<p>Becasue the profile takes more things into consideration than the FAFSA,( a federal methodology for calaculating your EFC) which really only inidcates whether or not you are eligible for federal aid in the form of grants (pell/seog) or stafford loans (subsidized/unsubsidized). Keep in mind that most schools that use the FAFSA only and most colleges in the country do not meet 100% of a student's demonstrated need.</p>
<p>Differences between the IM and FM models include:</p>
<p>IM collects information on estimated academic year family income, medical expenses, elementary and secondary school tuition and unusual circumstances. FM omits these questions.</p>
<p>IM considers a fuller range of family asset information, while FM ignores assets of siblings, all assets of certain families with less than $50,000 of income, and both home and family farm equity.</p>
<p>FM defines income as the adjusted gross income on federal tax returns, plus various categories of untaxed income. IM includes in total income any paper depreciation, business, rental or capital losses which artificially reduce adjusted gross income.</p>
<p>FM does not assume a minimum student contribution to education; IM expects the student, as primary beneficiary of the education, to devote some time each year to earning money to pay for education.</p>
<p>FM ignores the noncustodial parent in cases of divorce or separation; IM expects parents to help pay for education, regardless of current marital status.</p>
<p>FM and IM apply different percentages to adjust the parental contribution when multiple siblings are simultaneously enrolled in college, and IM considers only siblings enrolled in undergraduate programs.</p>
<p>The IM expected family share represents a best estimate of a familys capacity (relative to other families) to absorb, over time, the costs of education. It is not an assessment of cash on hand, a value judgment about how much a family should be able to use current income, or a measure of liquidity. The final determinations of demonstrated need and awards rest with the University and are based upon a uniform and consistent treatment of family circumstances.</p>
<p>Except in the most extraordinary circumstances, Colleges classifies incoming students as dependent upon parents for institutional aid purposes, even though some students may meet the federal definition of independence.</p>
<p>Students enrolling as dependent students are considered dependent throughout their undergraduate years when need for institutional scholarships is determined.</p>
<p>For institutional aid purposes a student may not declare independence due to attainment of legal age, internal family arrangements, marriage or family disagreements.</p>
<p>Your COA (cost of attendance) is tuition, room board, books travel expenses and some misc. expenses associated with attending college.</p>
<p>As a student, there are cumulative limit of $23,000 which you can borrow for an undergraduate education using stafford or perkins loans. </p>
<p>here is a link which will help you understand how assets are handled</p>
<p>i would also suggest searching for threads by scottaa and sblake7, because they do a really great job of breaking this down.</p>
<p>College Board's needs analysis methodology (start on page 49, thanks Blue)</p>
<p>sybbie719,
I've seen your posts about the differences between IM and FM, and I'm trying to find out some info relating to losses. Do all schools that use the profile or their own methodology add back losses? The reference to "artificially reduce AGI" hits hard, as I've had losses in both rental property and business in past years where the only "paper" losses were for depreciation, but that depreciation accounts for only 10-20% of the loss. The rest of the losses are real, but do the schools just add back the total negative amounts to make the AGI higher? The worst part of this is that it looks like I will have to liquidate the rental property to pay for tuition, but I'm sure they will include the capital gains in my income for that year. Any information that you can pass on to help me understand will be appreciated.</p>
<p>Most schools that give need based FA use either the profile or their own institutional form.</p>
<p>the rest of your question regarding rental property / capital gains, I am totally sure that scott or sblake would be in a better position to answer.</p>
<p>sybbie answered OP's question well, I think-- I'd only add that when she says:</p>
<p>"the money that is already in the ira is not counted toward calculating your EFC but the amount of money contributed to the ira is added back in to your parent's income."</p>
<p>it's the amount of money contributed that tax year (not cumulative) to an IRA or other retirement vehicle that, since it gets deducted from income to get the AGI on the tax forms, is added back in (along with some other things) by the FAFSA formula to get the total available income. So sheltering a bunch of income in an IRA in a college year won't help in terms of financial aid planning. They count it as available income, anyway.</p>
<p>On the business loss issue-- if you have a business that shows a net loss that reduces your AGI, the institutional methodology adds it back in (essentially, doesn't allow the business loss to offset your other income). Similarly, the IM doesn't recognize capital losses that exceed gains.</p>