I am filling out the net price calculators for a couple of schools and am a bit confused. My husband and I file married filing jointly so I’m confused when it asks for the income of parent 1 and parent 2. Am I to assume I skip those and just put in our wages, tips, and salaries, and business income on separate lines? Any help would be appreciated.
No…you don’t skip those. You get out your w-2 forms and put down the income each of you earned.
Ahhhh, I see! I thought if I did that I would be double dipping, but it makes sense now.
If you own a business, NPCs may not be accurate.
I’ve never completed a NPC myself for my kids…I hope I gave the correct advice in post 1.
We did the FAFSA and NPCs. For whatever reason they seem to ask for a breakdown of what each spouse earns, @thumper1. I don’t know why. Maybe as a check against the rest of the info. that’s entered. Or maybe each line is used separately in the algorithm to calculate the estimated net price.
The fafsa definitely also asks for that breakdown.
The breakdown affects taxes paid by the family and other calculations. If together they make $200k, it’s different if one makes $180k and the other $20k than if they each make $100k.
@twoinanddone: can you explain this further? I don’t understand how the breakdown of who makes what matters. Since I only work part time, our income is unbalanced like this. Is it better or worse to be in that situation?
It’s not a huge difference, but a high wage earner will max out on social security deductions at ~$120k ($127k for 2017) so that family may ‘save’ that 6.2%, where a 2 income, $100k each would still pay the full amount on both income. If one parent earned all the $200k, there would only be one set of work expenses - commuting, parking, lunches.
I’ll tell you that as a single parent it drives me crazy that a married couple can make twice as much before the AOTC and other credits phase out. I had only one income but still had to pay the rent, the car, the food, the electricity for a family of 3 (2 in college) while another family of 3, with 2 parents and one child are entitled to double the income level. Even worse, I could have 5 kids and still lose the credits where that married couple can still take them for one child in college.
From our D’s experience, the NPCs weren’t that accurate compared to actual EFCs she received with her admission acceptance letters, so I wouldn’t recommend making decisions about college affordability solely based on information derived from NPCs. They may be useful for comparing the rough relative affordability of several colleges under consideration, but as you consider the possibility of merit-based aid and the impact of substantial family assets, the NPCs become less and less accurate, especially for private colleges that require completion of the CSS PROFILE to apply for need-based aid.
One of the colleges our D applied to even wanted to know what kind of cars we drove as part of their financial aid application!
@ARTCC yes, that car question is a supplemental on the Profile for some schools. BUT there is no evidence at all that the info is used to calculate financial aid awards. In other words…if you put Tesla, it would not change if you put Ford.
I do agree, however, that the NPCs should be used as estimates of net cost. Some are actually very accurate. Some are not so much so.
Plus…if you own a business, own real,estate other than your primary resident, or parents are divorced…all bets are off.
One thing that could easily be confusing in NPCs is that “how much did parent 1 earn from work?” is asking for wages, salary, tips, and business income for one person. The lower line asking for “business income and losses” would require the business income for both parents. So the business income (as opposed to wages or salary) seems to be entered twice. But that’s just their way of finding out overall income and then specifically business income.