Low Income, High Assets--Already Accepted ED1

Paying for College
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<p>We have a bit of a strange situation. Our son was accepted to one of the NESCAC schools early decision (ED1). At the time of his application, we did not anticipate needing any financial aid because my husband usually earns enough. Unfortunately, his employer had a really bad year and he did not get a bonus so our AGI actually ended up negative for 2013 (after all of the adjustments). We have two other kids in expensive private schools and it will really be a burden paying for all of their education if we have to dip into savings to cover all of the tuition payments.</p>

<p>We were thinking of filling out a FASFA and the other relevant forms and asking his school whether they would consider doing something for him even though we originally told them that he would not be needing aid.</p>

<p>Our assets (both retirement and non retirement accounts + home equity) are high.</p>

<p>Has anyone been through a similar situation? Any advice on how to approach the school (or if its even worth it)? Any other sources of financial aid we may wish to consider (other than loans)?</p>

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<p>At this point you can ask for the opportunity to apply for FA but they may say no. And a negative AGI won’t end up that way on the Profile documentation when they add business expenses, etc back in. There really aren’t any other sources of FA outside of the schools. One other thing to consider is whether you can still afford this school and if your son should turn down the ED offer. If no other schools are in play any longer you can also look at him taking a gap year. Just options to consider.</p>

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<p><<<
Unfortunately, his employer had a really bad year and he did not get a bonus so our AGI actually ended up negative for 2013 (after all of the adjustments).
<<<</p>

<p>Does one of you have income from being self-employed or from being an independent contractor? Sounds like it otherwise how would “all the adjustments” end up with a negative AGI?</p>

<p>As Erin’s Dad mentioned, if there are “business deductions” (especially since it sounds like a LOT), very likely a CSS school will add many of those back in. </p>

<p>That said, you can file FAFSA for all 3 kids no matter what. Doesn’t matter if those are “late”. </p>

<p>That said, I’m still confused…
Are you saying that if your H had received his bonus, then you could have paid $150k+ next year for 3 kids in pricey colleges and pay for your living expenses (and is a child in boarding school, too)??? But without the bonus suddenly your AGI is negative? That seems really odd.</p>

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<p>You can certainly fill out FAFSA and take out the loan and if the other kids are in college they could do the same, but finaid at all colleges and unis is based on income AND assets so if your assets are high the drop in income will probably not make much difference in my opinion. It’s not all that difficult to hit full pay for private colleges with assets outside a retirement account. I’m guessing there was “income” but you were able to offset that with paper or actual losses which is how you got a negative AGI. </p>

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<p>Get your PINs for your students and self, so you can fill out the FAFSA ASAP. You need to get on the phone for all of the school, starting with the college and explain the situation . It will depend upon the school’s particular financial aid policy whether you will be eligible for aid. Many schools that do guarantee to meet full need, or come close to it say that the deadlines have to be strictly met, and some have sit out periods if a student did not apply for aid when applying for admissions. A number of schools that are need aware do this so that people don’t take advantage of getting possible preferential treatment by saying they aren’t applying for aid, and then turn around apply. No telling what your student’s school’s policy is. You need to talk to fin aid there ASAP. </p>

<p>Even if they do not give aid, your FAFSA EFC will permit your student to take out Direct Loans and for you to borrow PLUS (Parent loans). Maybe workstudy funds will be available. Again depends upon the school. Many NESCAC schools require PROFILE as well, so you will have to complete that ASAP also and see what comes of it. Are you also contacting the schools of your other kids? DO ask. </p>

<p>As others have said, if you have substantial assets, even a low income is not going to do it for aid as fin aid formulas use a both income and assets. I’m going to guess that your assets are such that you would not be eligible for PELL even with a zero income, due to the type of tax forms you are likely to have to file (not short form). </p>

<p>The other thing to consider is a gap year. Many in the college world recommend them highly. Some teachers and counselors at my sons’ private school feel most kids can benefit from them. You can also ask how fin aid would work if one is accepted ED, takes a gap year, and then wants to apply for fin aid. Don’t know how ED and gap years work, but i know some kids who had great experiences taking off that year between high school and college. With a college acceptance in </p>

<p>the pocket, it makes for a nice relaxing year in terms of that kind of stress, the college app thing,
and there are so many things a young person can enjoy in such a year.</p>

<p>We have friends with stair step aged kids and right during college time, one of them got a large payout and early retirement, which he promptly rolled over to setting up a business for himself. With two going to college, it really hurt the fin aid picutre, so both kids took that year off and resumed the following year when that blip was over. Saved them close to $30K, really more since the kids worked that year, and earned/saved a nice hunk of change too. Also helped with the business start up. Worked out win-win all around.</p>

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<p>You need to deal with all three of your college kids schools. Have you applied for financial aid for the other two kiddos too? If not, you should plan to do so.</p>

<p>As others have noted, you need to contact the colleges. They will tell you how to proceed.</p>

<p>I agree with what others have stated. Are you saying that the ONLY thing that makes you have a positive income is the annual bonus? and that annual bonus pays all of your household bills AND makes it possible to fully fund three expensive private college costs (that could be $180,000 a year)? </p>

<p>In addition to the FAFSA, most of these full need schools also require the CSS Profile. And all of these schools have deadlines for submission of these forms, that either have passed or are very soon. The exception ins Princeton which uses its own form in addition to the FAFSA.</p>

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<p>I agree. this details the part that doesn’t make any sense. It suggests that the wages are SO LOW and the bonus is SO HUGE that the bonus is paying for ( or is supposed to pay for):</p>

<p>The family’s living expenses</p>

<p>Three children in pricey privates at $60k each</p>

<p>One younger child going to a eastern boarding school.</p>

<p>Are you saying that the bonus is usually like $350k per year? And you guys had NO IDEA that the bonus would be ZERO this year??</p>

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<p>You absolutely can file the FAFSA. But I’m thinking that if you really have $0 AGI, this will trigger verification of your income. Schools are going to want to know how you are paying your everyday bills on $0 income. Just be well prepared to document everything.</p>

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<p>My brother basically makes minimum wage from his employer plus some health insurance and other benefits that he partakes, office space, etc. He get paid for what business he brings in the door. He’s really a salesman with commisions, I guess, though that is not how is job is described. He also has deductions up the whazoo. Last year he got into a dispute with the IRS about what he owed in taxes with some of the way things were done, and happily his case has been resolved in his favor. BUt the bottom line is that he can have a negative AGI though he lives quite well. So it is possible.</p>

<p>Not that it matters. The issue at hand that is the question is what to do about a kid who is accepted ED without having applied for aid, and now it’s being requested. As I wrote above, some schools will put such cases on hiatus for not applying for aid, some will simply not give aid because deadlines may not have been met, some don’t guarantee to meet need anyways, some might still consider the aid app, some use PROFILE that will count home equity and other things that may not come down to need for institutional purposes. Heck, with substantial asset that are non qualified and excluding home equity, the FAFSA EFC may still be more than COA. It all depends on what the individual situation is and the school’s fin aid policies.</p>

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<p>^^
That may be so, but this child applied ED last Fall (October maybe), and at that point the family didn’t think it needed to apply for aid. </p>

<p>Does it make sense that the husband had no idea that his employer was doing so badly at that point in the year (fall) that a mega-bonus would not be forthcoming? Keep in mind that the bonus would have to be huge in order to provide the funds for three kids in pricey private universities and a younger child in a pricey NE boarding school. Those tuition expenses alone would be over $200k.</p>

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<p>If the family really has a negative AGI…that would imply very poor immediate cash flow. Perhaps all three college bound kids should,take a leave for 2014-2015. </p>

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<p>It does in some types of work that depend directly on, say stock performance or some other factor that can take a last minute slide. In my brother’s case, no. He knows month to month how his year is going. But you know, if had lost his IRS case, he’d have had to pay a ton of taxes this year , and if he had a kid in college, that would come right off income for fin aid purposes. Enough of a tax liability, and yeah, it’s possible to go negative that way. That is one debt that if you pay, comes off the AGI. There are others as well. He could also have ownership in the business. I’ve known some high flyers on technically negative income. </p>

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<p>^^
That’s not a bad idea because even if they apply for aid at those schools, it sounds like they’re CSS schools (or use their own forms like P does), and they will look at all the family’s assets and still expect a big contribution. </p>

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<p>I tend to think that a gap year is often a good idea and in this case a gap year would give your finances a chance to settle as well as an opportunity to find colleges that will be affordable in case the paycheck doesnt rebound.</p>