<p>Help. I am serving on a scholarship committee and a former recipient has applied for a 2011 scholarship, but I am wondering if his level of "need" is accurate: </p>
<p>Note: I live in a small town, so I am unfortunately aware of some factors that I wouldn't know if this was a big city. In this case, I wish I had no outside knowledge. </p>
<p>My question: Is it POSSIBLE for a student with married, self employed parents, who just (in the last 3 months) purchased a 500+K house in a semi-affluent town to have an EFC of $340?</p>
<p>SAR is dated mid January, so I am wondering if it is even possible to have enough income information to complete taxes and finalize the FAFSA at that early date. We only require page 1 of the SAR for EFC verification (which is a lot more than a lot of local/regional scholarship applications require), so I am not privvy to the particulars on the whole application. His EFC last year was similar. ( Student is at a pricey LAC and younger sibling participates in a lot of expensive EC's)</p>
<p>I have not been suspicious of application "fraud" in the past--I am usually more than happy to give students the benefit of the doubt, especially in this economy. But in this case, something doesn't feel quite right. </p>
<p>Am I right to be suspicious or am I out of line? I'm really hoping that you all will tell me there is definitely a way this could be legit. Academically this student is VERY deserivng.</p>
<p>If you have concerns, can’t there be an audit, for the family to show proof? It sounds that you have some reasonable grounds for suspecting that the extremely low EFC might not be appropriate in this case. You could ask a hypothetical to your supervisor and take it from there.</p>
<p>It is possible though it does seem odd. I can think of 3 things. First, the FAFSA ignores home equity. (Note that home value is never a factor-- just equity.) So they could have built up equity in a house somehow and sold it to buy this one. (If they have been low income a long time, they could have inherited a house or $, won a court judgment or had a divorce settlement at some point.) Second, FAFSA only looks back one year so they could have had $ for years and built up equity but have had a business crash last year. Third, they could have their business structured in a way that it pays out little money.</p>
<p>What does seem odd is if they have recently qualified for that mortgage (unless they didn’t qualify because they were rolling over equity). I think I would see if there was a way to ask for additional documentation.</p>
<p>I guess my first thought was that there is no way that they could get approved for a mortgage on a new house with no income, but I didn’t consider that maybe they paid cash for their home. But the home they just moved out of was small and very modest. There is no divorce settlement. </p>
<p>HImom–I think I’ll bring this up with our director and let him worry about it.</p>
<p>They could have had mom and dad help pay for the house. Or gotten an inheritance. I have neighbors that live very well, courtesy of their parents. Their house is paid for. They pay only taxes which though high here, is not a house payment for a house of that caliber anywhere. Vacations are sponsored by family. They get hand me down barely used cars from family and family picks up the tab for shopping sprees and God only knows what else. They qualify for financial aid for their kids to go to private school in the area–the kids are not college aged, and I won’t be surprised if they get financial aid for college.</p>
<p>I know another family where the couple isn’t married. Didn’t believe in it. So the EFC of the custodial parent could be low indeed. You really don’t know other people’s private business and unless that is part of your responsibility (to vet the FAFSA), you should leave it alone. It IS the responsibility of the fin aid people at the colleges, so they should ask hard questions when things don’t look right, but for a local scholarship thing, I don’t know how much private financial info you should be privy to. If the FAFSA is required and you have it, should you be making presumptions on standard of living and other things? I don’t think so.</p>
<p>Thanks Cpt. As I said, I don’t have the FAFSA. Having one would remove most doubt I think. All I have is the first page of the SAR, dated in mid January. At that time, an applicant could mark “will file” and then enter whatever figures he/she wanted on the application to get a low EFC and then enter correct figures much later when they update the application to reflect the figures on the income taxes. </p>
<p>It is not my job to make judgements about their standard of living. It is my job to figure out which applicants in our small town have the most need and award those applicants a substantial scholarship. Many students explain in more detail circumstances which necessitate financial aid in an optional supplemental question. So, from that I am aware that often the EFC often does not tell the whole story. This applicant has not answered that question unfortunately. </p>
<p>Sighhhh…I really think I won’t worry about this any longer. For reasons I won’t go into here, I LOVE this family and would be VERY uncomfortable putting them on the spot about this. I think I’ll just go with the assumption that it is legit.</p>
<p>I find it very doubtful because the cost of taxes, upkeep, utilities, etc on such a home would require a decent income…even if they somehow bought the home with cash. </p>
<p>self employed parents</p>
<p>I think THERE is the issue…they are likely either hiding income or declaring very high business deductions (maybe including their home as some kind of “office”) to get their income down to a low level.</p>
<p>When I had to do a function for our private school, scholarship families were not charged the hefty seating fee. I was shocked at some of those exempt from paying. Drove better cars than I did, some lived in some mighty fine homes. The level of need for getting scholarships there is pretty steep, not nearly as generous as FAFSA. But, you know, it was none of my business. It was not for me to question. I was not privy to the financial aid materials and proof that got them the scholarships and be on the list as exempt from paying. It was also my responsibility to keep my mouth shut as to who was on the list. </p>
<p>If, indeed, it is part of your job to assess need, it 's one thing, but I would not go poking into private financial business unless it is clearly something you are supposed to do.</p>
<p>Cpt…here’s the difficult part. If, we ignore the possibility that this student’s family is fudging the numbers as you suggest, the student, who is academically OUTSTANDING is going to “win” the $5K need based scholarship. The result is that another student with very high grades, stellar EC’s and a $1980 EFC attending the instate public whose parents live in a very small apartment, is going to get zilch.</p>
<p>^^^
That is a problem…a likely more deserving kid is going to get screwed.</p>
<p>What options do you have to determine accuracy? Are you ONLY just using a copy FAFSA SAR? If so, how do you know if one of the colleges hasn’t found a discrepancy and their EFC hasn’t been changed?</p>
<p>Yes, a copy of the SAR, the students EFC on the application and a signed statement saying that the information is accurate is all we have. I don’t have any idea what the university FA office has discovered or calculated for EFC. Would any scholarship committee know that?</p>
<p>This reminds me of something my friend told me last year. Her brother’s family operated a restaurant business and were self-employed. They had money but ended up with very low EFC and she asked them how they did it. Apparently their business is registered under a different name and was never declared in the FAFSA.</p>
<p>scubasue, I think the committee would be within its right to ask for the final SAR to verify eligibility but I’m not sure one should assume fraud. </p>
<p>mom2collegekids, if a self-employed person does claim a home office expense, the ‘advantage’ is limited to deducting that % of the mortgage and expenses as a business expense. Honestly, if these people are low-income, it seems unlikely that they would even have a huge mortgage so that that deduction would be significant. As far as upkeep and taxes… Low-income people often don’t do the upkeep their houses require and taxes can be very variable. (Have you seen the tv special where they list all these famous people and show how little they are paying in property taxes?) </p>
<p>formykids, These people are self-employed, they do not own an incorporated business. While they can take off expenses and deductions, they can’t legally neglect to mention a huge asset. </p>
<p>OP, you mentioned a pricy LAC and expensive extracurriculars. Could those have been obtained through financial aid or fundraising, particularly regarding the extracurricular? I have seen coaches waive fees for talented kids.</p>
<p>I know the top scholarship at the LAC is $18K/year. I assume with that EFC student is getting the pell grant. I have no idea about how much need based grant money student is getting from his school. </p>
<p>EC’s are of the sibling’s. 1 happens to be the same EC my son participates in. There is no fundraising and no scholarships. This I know for sure. </p>
<p>We can ask for more information, but of course doing so would be VERY uncomfortable for everyone involved. IF $340 is legit, they are going to be offended and rightly so.</p>
<p>Lots of the top LACs meet full need. Plus, there is also “preferential packaging.” One of my kids applied to a top LAC that doesn’t meet full need and not only did it meet our full need, it did so with grants because they really wanted my kid to go there. There are outside scholarships the student could have won. </p>
<p>Could grandparents be paying for the extracurricular?</p>
<p>“If there is - say - a $250k mortgage on this property, there’s no way their income is low enough to have that low of an EFC.”</p>
<p>Huh? It depends on how the mortgage is structured. </p>
<p>Also, I know of people with very low incomes living in expensive houses. In many cases, there are other people living in the house who contribute to the rent-- a grandmother’s social security check, a sister or brother of the parents.</p>
<p>Why is this out of the ordinary, our senators and congressman get away with this every year when they send their kids off to College. Maybe the parents are senators.</p>