<p>I really think that you hit the Auto 0 jackpot with AGI of $27K and 1040A. I looked at a past thread that swimcatsmom posted on and it seems when Auto 0 is used, no income outside of the AGI is considered (for FAFSA, of course, not for institutional aid). I don’t think there’s anything else that you need to do as far as FAFSA is concerned. I don’t think know about TAP though…they have slightly different reporting requirements but I’m sure they’ll prompt for info as you go along (haven’t done one in a year, so getting a little fuzzy on what the exact questions were there).</p>
<p>
</p>
<p>That might make rational sense, but it is just the way financial aid works.</p>
<p>We live on Long Island. My younger D’s EFC was something like $2800 per the FAFSA. Smith meets 100% of need (as they calculate it). They calculated what we could pay as $8500 based on our “home equity” (since the house is worth a heck of a lot more than was paid for it many years ago). Property values are very high on Long Island - along with our property taxes… but that is not accounted for in most cases.</p>
<p>Do we have that extra money “laying around?” Heck no. But it is my responsibility, not Smith’s, to contribute to my daughter’s education, so I do it joyfully (even though it is difficult at times).</p>
<p>I am very grateful for the package we did get from Smith.</p>
<p>C’est la vie.</p>
<p>Steve, as I said before, you can do whatever you think you can get away with, but if NYU thinks a FAFSA adjustment is in order – they can go in and make whatever changes they feel like. That’s just how the system works – colleges modify FAFSA’s all the time.</p>
<p>NYU’s modification will not impact any other college – I don’t think their revisions get forward to other colleges, which still see only the original FAFSA and can make changes of their own, or not. </p>
<p>I’ve had worse than a 1040a override show up on a FAFSA – when my son was in college, the FAFSA still required that business assets be stated, no matter how small the business. I am a self-employed freelancer. Since the only equipment i own for my business is computer, printer, phone, etc. – I valued my business at roughly $1500, the fair market value of the stuff I had that I could sell. My son’s college went in and changed that figure to $35,000 – when I asked how I could possibly have a business worth $35K, they explained that they were assigning an asset “value” equivalent to my prior year’s net income from self employment – if I netted $35K in a year from my business, then my business must be “worth” $35K. It was a waste of breath for me to point out to them that as since I was the only worker at my “business”, and since I was not for sale and that I doubted anyone would pay me the value of a year’s work unless I actually performed the work for them – that it made no sense to treat my income as an asset. Of course it was double-counted, once as the income, the other time as the asset. And no simplified needs test for me, given that self-employed people have to file a 1040 – even though my work overhead is quite low. (To net $35K I would have to take in about $45K - still below the amount that would have qualified me for simplified needs if I had taken in that sum in wages rather than direct pay from clients). </p>
<p>That’s just the way the system works. Probably its there precisely to catch the fact situations that don’t quite fit expectations, like some millionaire living off of tax-free income from investments and pleading poverty.</p>
<p>
</p>
<p>Calmom hit the nail on the head.</p>
<p>Calmom,</p>
<p>It looks like in your situation you were not treated fairly. It then becomes easy to look at some else’s situation superficially and become angry if they are in better financial shape than you and get a better deal at the same time.</p>
<p>To be realistic, you have earned income and I do not. If my assets go, I have zero income and zero assets, which would be worse than your situation. You have to look at human capital as well as financial capital before you can equate circumstances. From a business valuation standpoint, you have to separate wages from profit and the college did not have the sophistication to do so. This is an example of lack of understanding of finance causing a clearly unfair result. I don’t think your solution is to advocate a continuing lack of understanding of finance to cause another unfair result. If you have modeled my situation and know it is safe from the standpoint that I will not wind up on public assistance, that is one thing. But to fling inflamatory remarks like “millionaire pleads poverty” without genuinely understanding the situation, I don’t think you are helping yourself there. The statement is not accurate as was explained above. Inspect it for yourself if you have any questions.</p>
<p>I think it was confucius who said do unto others as you would have others do unto you. If you want people to treat you unfairly in the future, you should treat other people unfairly now. If you want to be treated fairly in the future, develop the mind of being totally fair to others now.</p>
<p>According to the Sarah Lawrence statistic of 1.5, my spending would place me just marginally above the poverty level in my area for 7 years (I won’t go through the adjustments, but it is roughly accurate). Yes, I have assets, but it would be irresponsible to end up like my uncle. The point is, when I can, I scrape together some money from my budget and give it to charity. It is difficult for me, but I try. The best way to break the oppression of my budget is to be charitable. The best way for you to break a cycle of unfairness is to be fair. The system may not be fair, but that does not mean you must contribute to that unfairness.</p>
<p>Steve, your kiddo didn’t get accepted to Sarah Lawrence. He got accepted to NYU.</p>
<p>Another thought…did your son receive child support from his mom? If so, that goes on the FAFSA too.</p>
<p>Sarah Lawrence evaluated the cost of living in the area. I was reflecting on the economic implications, not the fa implications. There were no child support payments.</p>
<p>Doesn’t matter if there were “official” child support payments – if your child received any money from his mom, it needs to be reported.</p>
<p>He would stay with his mom. She fed him and bought clothing. He did not have an allowance. I don’t even know what dollar amount to report and neither does she.</p>
<p>
Well, yes, if my assets go, I will have zero assets too, and if my income goes, I too will have zero income. </p>
<p>The financial aid system does not exist so that rich people can hang onto their assets. If you ever had an income and if you are disabled now, then you should be eligible for Social Security disability, and Social Security when you are older. That’s the government system in place to provide for people who can no longer earn incomes, not Pell grants.</p>
<p>Similarly, the FASFA has an asset protection allowance built in. I don’t know how old you are, but it probably is around $25K for you if you are in your mid-50’s. That’s it - that’s all the law “protects”. In other words, they figure that a single parent ought to be able to hold onto that amount of cash in the bank.</p>
<p>You also miss the point of what I posted about the college adding a business value to the FAFSA. I wasn’t complaining – my son attended that college because they were far more generous to him with financial aid and grants than any place else. My point is that the COLLEGE where a student attends can and DOES modify the FAFSA in accordance with their own rules and standards. I thought that the business valuation thing was crazy, but all it did was raise my EFC by 5.6% of the total, which would have been under $2,000 - and maybe that is what that particular college chose to do rather than scrutinize my schedule C writeoffs-- something that other colleges typically do. </p>
<p>My point is that even though the rationale didn’t make much sense, the college financial aid department has the legal authority to make changes to the numbers in the FAFSA calculation. I think that the system is set up so that there is a kind of a partnership between the government and its system of forms, and college financial aid professionals who are expected to make discretionary decisions within a set of guidelines. </p>
<p>I think the financial aid professionals get training – workshops and documentation - from the department of education so they know very clearly the limits of their discretion.</p>
<p>I have another question to Steve – you said that you had an investment loss, and that filling a 1040 would save you about $2000 in taxes – but you would have to waive that if you filed a 1040a. Is that a loss from 2010, or a carryover from 2009 or before? Did you provide NYU with a copy of your 1040 from 2009 as part of the ED financial aid process?</p>
<p>I’m thinking that if NYU sees that you have filed a 1040 in the past and have losses to carry forward, it makes sense for them to presume that you are filing a 1040 for 2010 – and to adjust the FAFSA accordingly. Even if you prepare a 1040a – without claiming the loss – that would not preclude you from later filing an amended return with IRS to get a refund. So it seems to me that if NYU sees a situation where a person would file a 1040 but for the impact on financial aid, because their tax situation is clearly more beneficial under the 1040 – then it is appropriate to use their professional judgment to specify 1040. The system was never meant to allow families to manipulate the situation by deliberately filing a disadvantageous tax return – and you’ve pretty much said that is exactly what you plan to do.</p>
<p>Steve, if your AGI is very low…near the poverty level, perhaps you should apply for food stamps or some other kind of government assistance. If you qualify for that, I believe your low income/assistance eligibility would qualify you for the simplified needs test even if you file a 1040. I could be wrong about this…but I think the 1040A/EZ OR one of the means tested criteria…and the low AGI are the acid test.</p>
<p>But then…you would have to qualify for food stamps, reduced lunch or the like. Perhaps that is not possible…with your very significant assets.</p>
<p>If your assets go and you have income, you can live off of your income. If my assets go, I have no income and must apply for public assistance immediately. The situation is different. My income is linked to my assets, yours is not. If you lose your ability to earn income as well, that is a different story.</p>
<p>Social security disability does not apply for partial disability, only full. You cannot get social security disability if you are the owner of a company, if you are injured between jobs or many other circumstances. Same is true for NYS. If I work now and make a living, I get no disability insurance of any kind.</p>
<p>If fafsa sees you have no income, they will assume you will pay for college from your assets until you only have 25k? I think not. If you can support yourself, that is another story.</p>
<p>There is a link between assets and income in terms of what will be available to pay liabilities/expenses. You are missing this link. Your math is wrong.</p>
<p>I always assumed you could not get food stamps if you have assets. I am pretty sure medicaid is that way.</p>
<p>If you have $1million dollars in the bank and it earns 3% interest, you would have $30K per year in interest.</p>
<p>If you have 500k in the bank and earn 6% for a bond maturing in 1 year, you also earn 30k per year. The next year it will be 15k. To understand long term income streams, you have to find asset value and make a reasonable assumption of the long term return that can be earned on it. The actual income stream it produces in any 1 year can be very misleading.</p>
<p>Steve, if you are in such dire straights, you should not be sending your kid to NYU. </p>
<p>But the financial aid system is NOT going to help you. They are not going to let you play games and sit on top of assets that are sufficient to produce $55K+ of annual income in the current economy (low yield on investments) – and then plead poverty. </p>
<p>I think that you thought you could shift things around, moving enough of your assets into tax free municipals so as to keep your taxable income below the FAFSA 0 EFC threshhold, and making sure that the company you own produced no income for 2010 because of what you perceived as a 1040a loophole that you could utilize to your advantage. You probably mistakenly thought, as well, that NYU, being a FAFSA-only school, would give better financial aid – that is, at the time you concocted this financial-aid scheme, maybe you thought that you had hatched the perfect plan to get your son a near free ride at a top private university. </p>
<p>It didn’t work. I don’t think it work anywhere, but you might be able to pull something off with a college that doesn’t scrutinize financial aid closely.</p>
<p>You are NOT a 1040a filer. You’ve got a history (past tax returns). The interest income on your tax returns clearly discloses a HUGE amount of assets. You own a company, which means that you have filed a Schedule C in the past and/or appropriate business returns. You have capital losses. You have claimed that you can’t leave high-expense Westchester County because you have to fulfill commitments to clients of your company that doesn’t produce an income (*Hint: move to the Bronx or Yonkers. I have no sympathy for you. My d. lives in Harlem and commutes an 2 hours on the subway each day to get to her job downtown. ).</p>
<p>I know you think you are very clever, but your tax situation belongs on 1040, not 1040a. If you have filed a schedule C in the past on your company and there has been a significant income, and you don’t file this year – you may find IRS coming after you down the line, wondering what you are concealing. (It’s hard to manage steer a company in neutral - you are either going to have net gain or net loss, and I can tell you that if I had a bad year and ended up with a paper loss from my self employment – expenses more than income – I’d definitely be wanting to reflect that loss on my tax returns.). Now maybe you’ve got things set up as an S-corp rather than a Schedule C situation, and you’ve jiggered the books enough so that the there’s no income to report on a K-1… but no loss either? </p>
<p>If you have capital losses and self-employed or K-1 losses, than while technically you may not be required by IRS to file – you have an income & asset structure that puts you in the setting of being a 1040 filer.</p>
<p>As I said, the NYU financial aid people know full well that you can file a 1040A in January for their financial aid system, and then next September file an amended 1040 to pass through your business and capital losses. You could do that every year for 4 years – filing the 1040A early in the year, the amended return down the line – or you could even hold off until your kid’s junior year, since the time for filing an amended return is 3 years. </p>
<p>So everyone sees through your little game. Even if that wasn’t the case, even if the NYU financial aid people were just being jerks – they would have THAT RIGHT.</p>
<p>Your kid does NOT need to go to NYU. If you have enough money to pay the difference between the full COA of NYU and whatever you can get from a Pell grant or TAP-- you don’t need the Pell, even if technically it is legal for you to file a 1040a instead of a 1040. </p>
<p>Send him to CUNY… last I checked, that was still in NYC. Let him live to you and commute from your new, more affordable Bronx apartment. That will keep costs low. You may even be able to get the Pell grant that way, as long as you aren’t selected for verification, because the CUNY financial aid people probably won’t even ask to see your tax returns, given that the full COA can easily be covered by a Pell, TAP, & Stafford. (Since they aren’t paying out any grant money of their own, not much motivation question a FAFSA which superficially shows a 0 EFC).</p>
<p>
And I’m sure you’ve used your financial know-how to manipulate things to be very, very misleading on the FAFSA indeed.</p>
<p>If one has any assets, one is supposed to declare them on the PROFILE and FAFSA. Maybe this has been discussed already (I’m losing track of this thread), but it sounds like you do have significant assets, steve123, and are living off the interest. It would seem to me that this will impact your EFC, ability to contribute, ability to get aid (no matter what), especially if it were in the million dollar range. NYU is going to see this. This is probably why they are not being “sensitive” to your situation (just guessing). They don’t care what you choose to do with your time (you talked about doing charity work, thereby having a low income). If you’ve got big-time assets, they are going to see this as a source of money for THEM. I read on another thread about a family where the H just lost his job and they will need more aid for their children who are in their last years of college. But they have $250,000 in assets. I bet their children’s colleges will say “just liquidate!”</p>
<p>NOTE: I wrote this while CALMOM was writing her excellent analysis of this situation. I am only a newbie fin-aid-applicant observer of all this, barely adding my 2 cents.</p>
<p>I get it, it’s a financiers’s way of looking at the world. The problem is ironic, colleges are far more brutal than the IRS. These boards constantly have people with an angle which is just the American way. Putting real estate in an LLC and calling it a small business, focusing on a low AGI not realizing many of the expenses will be disallowed, hiding cash in a mattress…A friend who is dir of FA at a Profile school has us laughing so hard we cry at the stories.</p>