Im just trying to surmise how to use these. Are they supposed to paint a pretty accurate picture of what to expect to pay? In my situation each school has been significantly higher than the NPC. (This is 8 different schools.) How does one use them?
How has each school been higher than the NPC if you’re doing the NPCs? Not clear what you mean.
If your parents are divorced or separated, either is self-employed or owns a business or your family owns rental properties, the NPCs won’t be as accurate as they will be if you have a straightforward wages/salary income.
The federal govt requires it is the real purpose.
Are you saying your actual offers were not close to the NPC? In that case you have some basis for a discussion with the aid office. Remember NPC is for first time freshmen domestic students and is meant to be an estimate. As mentioned above, those with more complicated situations that are too detailed are subject to a more exacting actual formula in the aid office.
And it seems the more simplified the formula inputs the less likely the output is accurate. I was just running NPC for Cooper Union in NYC and for NYU. Cooper Union’s asked a lot of detailed questions about income- actual AGI, pretax contributions to 401k etc. NYU only had a box to check for income over 99k. So does that mean someone making 100,000 is getting the same aid as someone with 150,000? Doubtful.
Whether or not it is accurate depends on how typical is your financial situation. It is not a random number generator.
The NPC gives you an estimate of what you will pay. I think you thought it generated an amount of financial aid that you would then subtract from the COA…
In our case I think schools were assuming our S would be a NMF because he will (almost certainly) be a NMSF. It’s true that most students advance, but unfortunately our S has a couple of D’s on his transcript. His overall GPA isn’t that bad, but he’s highly unlikely to be a NMF.
If you have an “average” tax return the NPCs should be fairly accurate. If you have a parent who owns a business or are from a divorced family or have very high assets the calculators may not be accurate.
The NPCs are also not accurate if your family owns real,estate in addition to your primary residence.
Thanks everyone. Sorry I should have clarified. I meant that the net price to attend in every case has been three times what these NPC’s are quoting. I got only a $5500 Federal loan in my aid “award.” Our family does have a rental house, but it doesn’t have positive cash flow. (Rent collected -minus mortgage-expenses = negative $.) Does that matter? Is this huge disparity worth talking to the Financial Aid office about?
Your rental property could very well be the issue. It is an extra piece of real estate, and some schools would,expect you to consider selling it to pay for college. Any equity you have in it is an asset. Any rents you receive are income. AND some of the deductions allowed for it per the IRS are not allowed for financial aid calculation purposes and are added back in.
The net price calculators are NOT accurate for folks who own properties other than their primary residence.
Even you are not making real money from the rental property, it is still an asset. Just like putting $300,000 in a no interest checking account. You don’t make any money out of it but it still has its own value.
Expenses include depreciation which does not affect cash flow. Are you sure it has negative cash flow?
^While depreciation is included on the tax return, many landlords would not include it in a discussion of their cashflow, since it isn’t really flowing cash. More likely, the pay down on the mortgage principal could be making the difference, along with the equity already built up in the rental as an asset.
The rental property is probably what messed up the results. Go back and run the NPCs including the value of that property in the assets line, and see whether the numbers you get are more like what the offers were.
We have no extra properties, no businesses, no divorce/remarriage. The NPCs that I ran were almost to-the-dollar accurate.
I imagine if the OP asked more detailed questions about the “negative cash flow” that it’s not true cash flow but depreciation. The OP is the student, not the tax filer and probably just used incorrect terminology.
It does not matter if it depreciate as they are considering the equity.
It may not be making that big of a difference. Run the NPC without the rental. Did you receive need based FA (pell grant SEOG?) if no rental? Did the NPC give any state of school grants? If not, then it doesn’t matter. If so, then talk to the school to make sure you are using the right figures for the rental.
If you are asking if the EFC is going to change school by school, it shouldn’t change that much if they are using the federal formula off the FAFSA. If your EFC is $10,000, that’s what it is. If School A is $20k, it might just ‘award’ the $5500 loan, expect you to come up with the $10000, and ‘gap’ you the remaining $4,500. If School B is $30000, same might be true except they award you a $10,000 grant. You still have to come up with the EFC, plus $4,500 plus take the loan.
@billcsho that’s true for the asset value. I was talking about the income being offset with depreciation. When the depreciation and expenses are taken out of the equation the cash flow will likely NOT be negative but could be a large positive number.
When you take out the depreciation and expenses how COULD it be negative? What else is there?
I think he meant that when the depreciation expense is taken out of the equation…