My EFC is 0...but will our savings/checking affect the amount of the grant?

Paying for College
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<p>Hello everyone! :-) This is my first post in this website. My husband and I are planning to go back to school. He's never been to college and I've been to college overseas, so I'm pretty much starting from scratch myself because the school is not crediting any of my past credits. My husband has been a self-employed guitar instructor. He rents a small room out of a music store and he's been doing that for 14 years. Since we have 2 kids, I'm a stay-at home mom since it's very expensive to leave two kids in daycare even when I go out to work. We're very responsible with our expenses...which means, we really live within our means. We live in an apartment, we own just one car and literally buy what we need. My husband earns around $43,000-$45,000/year gross, but after taking all the deductions (his room rent, his guitar supplies, health insurance, car mileage, office supplies, etc...), his income is down to $18,000+, which is way below the poverty line. However, we've still managed to save whatever we have left-over of his income every month. Before we got married, he has already saved a pretty good amount of money, and it grew over the years because he lived with his parents and pretty much never paid for rent whatsoever. Since we had kids, he's been getting refunds during tax return times and those refunds have added up to our savings. Right now, we have a total of $38,428 in our checking and savings account. That's our cushion in case something happens to him and he couldn't work, we won't be left starving and homeless. We have zero debt and even maintained 800+ credit scores. That's how obsessed we are about being frugal.</p>

<p>We have never thought of going back to school as we couldn't obviously afford it, until a friend of ours encouraged us to apply for FAFSA. After we both did that, we both got an EFC of 0. However, it's subject for verification. So, we're going to wait for the school to contact us as to what types of documents we need to present to them. We have included the $38,428 savings/checking in our student asset information and we still ended up getting an EFC of 0. </p>

<p>My questions are:
1.) Even after reporting our savings/checking information, our EFC is still 0...will our hard-earned savings hurt us as to how much grant we will be eligibible for? </p>

<p>2.) We're hoping to start in the upcoming Spring Semester. However, the school's cut-off date/priority date is March 1st. Does that mean that most of the grant money has already been given away and there's a big possibility that we're not going to get a good grant amount?</p>

<p>3.) How do schools calculate how much a student is eligible for? I'm just concerned that there might not be enough funds left for us if we start on the Spring semester.</p>

<p>4.) When we filled our FAFSA application, we were not asked for asset information. However, I've put it in anyway so I would know if our EFC are going to change, and it's still 0. Now, was that a STUPID move that I did? I'm scared if I screwed it up!</p>

<p>Any other advice would be appreciated. I apologize for the very long post. Have a good day everyone!</p>

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<p>The assets will have already been taken into account when calculating the EFC. You have a certain amount of asset protection and you are probably below that. The verification will check that your information is correctly entered into FAFSA.</p>

<p>If you already have a bachelors degree from a foreign country you may find you are not eligible for the Pell grant (the main federal grant). The Pell is for first time bachelors degree undergrads only. Even if the credits don’t transfer for your program the feds consider you to already have a bachelors. There was a student posting a few weeks back who had a degree from some US college that no other college would take the credits for and he could not get the Pell.</p>

<p>Having a 0 EFC does not mean you will get a full ride unless you are going to a school that promises to meet full need. Those are usually the very selective schools like Harvard. Most state schools do not promise to meet full need. The 0 EFC is just a # to determine what sort of federal aid, including loans, you may be eligible for.</p>

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<p>Thank you so much for your response. No, I haven’t finished my college degree. I only finished 2 years, so I am still an undergrad. So, I will be starting from scratch when I go back to school. I am not really expecting a full ride…the bigger the amount of the grant, of course, will always be very, very helpful. :-)</p>

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<p>Do you know which school you’ll be going to? Will you remain living where you’re living?</p>

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<p>As you have not completed a bachelors you should be ok for the pell as long as the verification shows that you answered everything correctly. With a 0 EFC you would be eligible for a Pell grant of $5350. That is the amount for the 2009-2010 school year. For a semester you would get $2675 (as long as you are enrolled full time, otherwise it would be less). The Pell is not a limited funding grant so it does not run out and you should still be able to get it in Spring. Your husband would be eligible for it as well. Other aid would depend very much on the school.</p>

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<p>Can we be sure it will really be a 0 EFC? I am by no means a FAFSA expert but it seems some of those deductions won’t count.</p>

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<p>^^^</p>

<p>Haven’t we heard that self-employed don’t get to take all these deductions when doing FAFSA? Maybe I’m wrong.</p>

<p>Another thing I don’t get…when parents return to school, and they’ll continue living in their home, are their living expenses figured into their COA just like it’s figured for children who will be living in a different residence while going to school.</p>

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<p>They get the same COA as any student living off campus at that school. I am back in school and my COA is the same as any other student.</p>

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<p>What matters for earnings is what is reported as income on the 1040. I imagine OP’s husband earns a certain amount but takes deductions on Schedule C. The bottom line profit or loss from Schedule C is then reported on the 1040 as business income. This is entered in the earnings from work section of the FAFSA, and it is part of the AGI. I doubt the whole $45,000 actually ends up as business profit on Schedule C … it is probably much lower, which is why the EFC is 0.</p>

<p>From OP’s other posts, though, I worry that the family is auto 0 due to saying OP is a displaced homemaker/dislocated worker. It doesn’t sound like she actually fits the criteria. So she would need to meet one of the other non-income criteria. Obviously, she is not eligible to file a 1040A or a 1040 EZ due to business income. That leaves having someone in the family receiving federal means tested benefits at any time within the last 24 months. If that is not the case, auto 0 will not work.</p>

<p>I often have to take families out of auto 0 due to incorrectly answering the tax form question. However, many remain 0 EFC just the same. OP, run your numbers through an EFC calculator, but do not answer yes to the displaced homemaker/dislocated worker question. See what you come up with.</p>

<p>A word to the wise: many schools have a priority filing deadline for receiving the best need based aid. This year, we have had to deny grants to students who filed past the priority deadline. We just don’t have enough money, because we have so many needy students. So make sure you apply early to get the best possible aid package you might be eligible to receive. Pell is always there for you … other grants may not be.</p>

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<p>OP, most states also have some sort of grant program for low income students. Unfortunately, many of them have deadlines which have passed as well. But it’s worth looking into and applying if possible.</p>

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<p>I would be very cautious to assume EFC is accurate.
( colleges can also correct FAFSA when they find it is inaccurate- they often request 1040’s & W’2s and make adjustments)
We made $55,000 when oldest was applying to college and our EFC was $14,500. ( no second home, no large savings or medium either).
That was nine years ago & I do not think that the formulas have changed significantly since then.</p>

<p>Also , it seems to me that business deductions, even charitable deductions only actually let you deduct an nth of what you paid out.</p>

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<p>Holy cow, EK4 … that is a high EFC for that income! Yet I know that your family made choices for college based on this reality, so it worked out for you. That’s the key.</p>

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<p>Well since for $14,500 it would have cost us the same for her to attend an instate college ( at full cost- possibly minus $1,000 merit aid), as her private college that met need, she opted for the private college.</p>

<p>However, not every student will want to attend/or be admitted to, a school that meets full need- those are usually private and selective.</p>

<p>Students/parents looking at schools for the 2010-2011 year, should also be aware that even if full need is met- it can be met with any combination of work-study & loans, as well as grants.</p>

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<p>I just filled out a separate EFC calculator and answered NO to the dislocated worker portion and it still ended up EFC 0. Before I said yes to that question, I was on the phone with a FAFSA customer service and asking her how I can determine for sure that I am a dislocated worker. She told me to answer YES, so I did. I tried answer NO and it’s still a 0. </p>

<p>As far as filling up the FAFSA form, all I did was follow the instructions as to what line they need the information from. (e.g. adjusted gross income-- Form 1040–line 37). We also do not file our tax return on our own. He has someone who audits his receipts by the end of the year for all the deductions. As self-employed for a long time, he used to pay huge taxes before we got married. Ever since we got married and had kids, he would get refunds, and the biggest was this year when we had our newest addition to our family. That refund added up to our savings…we didn’t spend that refund. He had about $20,000 in savings before we got married because he lived with his parents and never paid rent…just the electric bill.</p>

<p>I did call the financial aid office of the school we’re going to and I was told that the best time to get good amount of grant is to file the financial aid before the priority date, which is March 1st every year. But he said, it won’t hurt to find out if there would be funds left to get you in for the Spring Semester. </p>

<p>So, what types of documents are usually required for verification? We don’t have W-2 because my husband is self-employed. We only have the 1040. Our 1040 Tax Return for 2008 was the worst tax return we’ve had so far income wise. It was down about $2,000 compared to the 2007’s. He didn’t have as many students due to people cutting back during the recession. The wait is just killing me. hehe! The school said, they’ve mailed out packets to us so we can mail back some documents to them, and the wait is killing me. :smiley: I really appreciate all your input. I’m glad I chose this site instead of asking questions on Yahoo Answers and get really rude comments.</p>

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<p>It looks like along with the 1040, schedule C would be submitted.
<a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/136927-self-employed-question-about-fafsa.html[/url]”>http://talk.collegeconfidential.com/financial-aid-scholarships/136927-self-employed-question-about-fafsa.html&lt;/a&gt;&lt;/p&gt;

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<p>The school will have a verification worksheet you need to fill out (or they may ask you to fil out the federal verification worksheet, instead), and you will need to submit your 1040 including all schedules (they will see your husband’s income on Schedule C). If the school needs anything else, they will let you know. Watch your school email account for communications from financial aid, since many schools now communicate through school email.</p>

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<p>Are you both planning on attending school full time?
If you attend less than full time, that will affect aid.
If you are both full time, expect time commitment to be a full time job, you may want to consider that since you have been a stay at home mom with two kids.
Its true that you could split child care, by one attending days and the other nights, but then you still need to keep up your studies as well.</p>

<p>If your EFC is actually zero, and the cost of attending the school is say $10,000 and they allow you $10,000 for room and board- that doesn’t mean that you will be given $20,000.
Even at schools that meet 100% of need ( and those schools often require the PROFILE form which adds in more assets), that need can be met with any combination of work-study, loans and grants.</p>

<p>Another caution, I am unclear as to if you pay to have someone prepare your taxes or if they are just going through receipts and telling you what to deduct.
If you have someone prepare your taxes, their number should also be on the form and they should sign it. Most firms will also guarantee to represent you if you are audited, and unfortunately that seems to happen more with those who are self employed- forewarned is forearmed.
[Publication</a> 535 (2008), Business Expenses](<a href=“http://www.irs.gov/publications/p535/ch01.html#en_US_publink1000141995]Publication”>http://www.irs.gov/publications/p535/ch01.html#en_US_publink1000141995)</p>

<p>It just makes me nervous that his total income is double his taxable income- that just seems off to me and since only two states ( Ca and Or) regulate tax preparers, that makes me nervous too.</p>

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<p>The thing is, some schools will gap quite a bit, that is, they will charge you more than your EFC. In fact, you can expect this at most state universities and at private schools that don’t have strong endowments.</p>

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<p>We do have the Schedule C or what’s called the “Profit or Loss From Business” and have all the itemized expenses on Part II that are deducted from Part I Gross Income. We go to a tax person and bring all the bills, receipts, etc… to her then she does the taxes…and yes, she has her signature, social security number and contact information on the Preparer’s section of the forms. We have never filed our own taxes, we’re too scared to make a mistake and get accused for falsifying documents when we miss out on something. There are alot of different more forms attached to the 1040, Schedule C, D, etc… so I presume we’ll have to provide the entire thing when they ask for it for verification. </p>

<p>We’re both planning to do 3/4 time. My husband works from noon to 8pm, so I can take a morning class or some class that I can’t take online or he can do the same thing. Luckily, the school is just 15 minutes away from where we live in Southern Maryland. When I first went to college in the Philippines, I took 6-8 classes in one semester…it was very challenging, but I was single and had no kids and lived on campus. So 3-4 classes would be fairly manageable. Luckily, my kids are not too hard to take care of anymore. Our youngest is already 18 months old, so she sleeps long at night and naps long in the afternoon. :slight_smile: </p>

<p>I understand that the total amount of grant will be adjusted depending on our enrollment status. Any amount towards the tuition will absolutely be a HUGE help esp. if we do take a loan out for any excess amount that’s not covered.</p>