<p>Does this happen in your community? Our HS community awards many local scholarships, some strictly need-based, and only requires families to submit their FAFSA-determined EFC to establish need. Every year some kids from families with major obvious assets, usually the family's McMansion, somehow qualify. Some of the families even have vacation homes. Typically they are business owners. I gather that asset ownership can be shifted and income reduced by business owners during the FAFSA application years; maybe there are other techniques as well. Any ideas as to how to discourage these people from applying, so that those scholarships end up with the truly needy? What other documentation could be requested?</p>
<p>Luckily (or unluckily!) our community doesn’t give many awards because we have a lot of people who own their own business and manage to make it look like they don’t have much income – even though they have lots of “stuff”. Sorry - I can’t imagine what kind of documentation you would be able to require to result in only the truly needy qualify. But I sympathize</p>
<p>Unscrupulous people cheat on their taxes, is it realistic to believe they wouldn’t cheat on FAFSA? Still sad, though.</p>
<p>I’m not sure there is a way to control this. We have the same situation in our small community with lots of local scholarships available. I told both my kids not to apply for any of them as I felt there were other students who needed them a lot more than my kids did. Needless to say this past year one kid got a bunch of scholarships but they sure live in a nice house and have a lot of stuff. Unfortunately that doesn’t translate to FAFSA income. Sometimes it is due to a small business ownership, family money, etc.
You don’t always know the extent of others financial circumstances no matter how it looks.</p>
<p>It depends entirely on how your assets are structured. You can have assets that are not accounted for on the FAFSA. Houses cost signficantly less in the 1970s and have appreciated greatly when many parents were purchasing and settling down so having a “big” house doesn’t necessarily mean that it cost “big bucks.” Vacation homes can be inherited, can be jointly owned or could have been “stumbled” upon when the real estate market was significantly easier to get into and income was channeled there instead of the markets. Small business owners can have their cars, club memberships and many other tangible assets “owned” by the business. There is really no way that one family can look at another family and “assess” whether or not they are deserving of college aid. To assume that people are “cheating” is presumptuous. To discourage certain target people from applying is discrimatory. To dwell on perceived "unfairness"in the world will give you ulcers.</p>
<p>Do you find that to whom the scholarships (need or non-need based) are awarded is in part political?</p>
<p>I like what Momofthreeboys says here. </p>
<p>I had this really long post written, but decided it may have been too personal. So… let’s just say that if people are really cheating the system, it’s only embarrassing for themselves and anyway, karma has a weirdly accurate way of working things out.</p>
<p>I know a number of people who have cheated with their assets, income etc and received financial aid at the colleges that they go to.</p>
<p>It is weird that some one who is asset rich, yet income poor (and this can happen with the vicissitudes of self employment) would even want to put themselves on public display as recipient of a need based award.</p>
<p>Over the past 20 years we have had incredibly variable income, some years our kids would have qualified for free lunches, some years things were great, but as I discussed with several contractors wives, in the bad years we would not ever have asked for free lunches at school, the ‘ladies in the office’ gossip machine would have been too off putting. Plus as a self employed person, some times you don’t know for certain how good or bad a year was until you run the numbers on the tax return.</p>
<p>If a family bought a house 20 years ago and had merely benefited from market appreciation, they may not be rich</p>
<p>If they bought nice cars or other toys for cash in a good year, expecting the good years to keep on, they may not have the income you expect, nor do they want to sell the car/toy for a low resale price. </p>
<p>If they paid cash in the good years for assets, then they are not suffering with high payments which would require a high income to maintain the assets.</p>
<p>So, yeah, some people could be lying or even just twisting, but others could have a change in circumstances. I know I would prefer the high income years to the low income years and I know over the past 15 years we have had dramatic fluctuations in income, but we have nearly always lived day to day on a small budget and used extras in good years for specific goals (gotta love those stock market investments for which we sacrificed and still have not recouped that which was lost in the early 2000s)</p>
<p>So, maybe liars, maybe cheaters, maybe formerly successful not on hard times. Even so, I admit I would not have my kids apply in a down year for a local need based award, in part because I think others in our town would have thought my kid should not need it and I would not have wanted to reveal that data detail to those people for a $200 Elks scholarship. And I would also have hoped that next year would be better financially, so I should let some one else take that award.</p>
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<p>Their McMansion (if it is their primary home) does NOT appear anywhere on the FAFSA. If the FAFSA is the only thing used, the parents’ income and assets are the primary driver of EFC. Second homes would need to be listed as an asset. </p>
<p>Yes there are folks who try to cheat. BUT sometimes what folks SHOW as their “means” is very clearly beyond their real means. I know families with “second homes” but that second home really belongs to the grandparents or aunts and uncles. Sometimes those assets are not what they seem to be to outsiders. There are lots of folks who live way beyond their means and do not have the assets they portray themselves as having. E.g. we know many folks who drive pretty fancy cars…they are leased, not owned…costs are substantially less.</p>
<p>Even when I was in school, there were people who would buy gigantic homes, put all their money into them expecting that real estate was a better investment than stocks etc and qualify for financial aid because they didn’t show any other assets.</p>
<p>I agree with Thumper 1. I’ve met a lot of people who claim to have season NFL tickets, summer homes, etc. They drive expensive cars, and take expensive vacations. The wives go for manicures, expensive colorists, and visit spas instead of gyms.</p>
<p>Under the surface, their homes are empty of furniture and are mortaged to the hilt. The season tickets and summer homes are owned by relatives or employers, or they vacation with relatives. The cars are leased, and everything goes on a credit card. Their kids are applying for scholarships because these families didn’t save for their own kids, and they don’t really have anything in the bank. They might have counted on grandparents to do for their grandkids what the parents should have taken responsiblity for doing for their own kids. They obviously aren’t ashamed to let their life-style fiction be ripped away as their kids are identified as financially needy. In fact, these kids actually ARE financially needy! </p>
<p>Having gone through the self-employment ups & downs with a spouse, the good times can be balanced by some really lean times. Somemom described that roller coaster well. </p>
<p>I’ve also met some families who appear to be barely making it but who are actually very solid financially because they had long term plans and didn’t spend everything they earned. </p>
<p>It’s particularly frustrating whenever a single kid whose family claims to be needy walks away with the bulk of the scholarships (I’m thinking of a particular family where both parents worked in cash businesses…) I just take a deep breath and tell myself that (1) I don’t know the real situation; and (2) if that little devil in my left ear is right and they are lying, then kharma will fall on their house of cards one day.</p>
<p>our high school gives out a few need based awards, unfortunately not
too many. But the final decisions have to go through the Guidance Dept
and the folks there usually know who really needs the award.</p>
<p>^^^ I agree . One really doesn’t know another’s true financial makeup. As for people who are business owners ( we fit that description ) it doesn’t necessarily mean they " lie or cheat " on applications or taxes. Some of us take little in terms of pay in order to keep the business going in tough times. On the outside, I know people judge us and think we are wealthy when they see what we “own” We do have some business properties . We don’t live in a McMansion or drive extravagant new cars ( mine is 7 yrs old and I will happily drive it until my kids are done with college ) We have not taken a family vacation in over 4 yrs, unless you count visits to family and college overnights.</p>
<p>My kids have been recipients of a community scholarship that we are involved with. This year, the association had a very difficult time raising funds … so much so that only three applicants received awards. One of mine did. The criteria is really not need based , but merit.
I felt kind of bad when the awards were given out because they seemed truly sorry and even embarrassed .
Was the decision to give ours an award political…yes, since our business is a significant support to the fund raising. Not only do we attend all events , but we supply a generous donation for their raffles a few times a yr.</p>
<p>Appearances can be deceiving. As already said, many of those larger homes are mortgaged and, if they were purchased in the 2001-07 years with a mortgage of 80%, many of those homes could be at zero or even negative equity. Also, people tend to believe that business owners, doctors, and lawyers are always well off. How I wish that were true. Sure, they’re not “poor” but the idea that they have tens of thousands of dollars in cash at their immediate disposal is not always the case. And that is especially so in the current economy.</p>
<p>Also, in addition to home equity I think IRA and 401(k) money is not included on the FAFSA (someone fact check me on this). If so, that might explain how some people may have considerable assets but still qualify for need-based aid.</p>
<p>We own a small business (my husband and I are the only employees) that we operate out of our home. We asked our accountant how that would benefit us, and he said, “Not much!” We learned that some of the expenses we legitimately deduct will be added back into our income for FAFSA purposes! So we may make more money than we think, sigh.</p>
<p>I have a friend who owns a ‘successful’ business, she & her DH own the land and the buildings and the right to sell certain brands retail. I have spent time helping her and they are so strapped, so desperate it is crazy, but in a recent disagreement with the city over a permit, some city workers were talking about how loaded she is.</p>
<p>She has a huge loan for her building to cover as well as inventory costs plus all the day to day expenses of running a business that is somewhat season in income flows. People on the outside would have no clue how daily she robs Peter to pay Paul and not just moving business money around or slow paying bills, she did a cash out refi of her home and borrowed cash value from life insurance etc, trying to get through the past couple of years.</p>
<p>But if her kid got a need based award people who be very aghast. Sometimes a business owner is the only one working there NOT being paid and sometimes all a business owner has done is bought the right to try to keep the doors open, they are not always making the big bucks.</p>
<p>I know people in my old town thought we made more than we did most years, because we did very well some years.</p>
<p>But also, in fairness, some people do lie & cheat.</p>
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<p>I believe that the contribution that you make to your retirement account is added back as income available to pay tuition on the fafsa too. Frankly, I do not find that fair. If someone has to fund their own retirement because they are not going to receive a pension like many state or federal employees, funding one’s retirement gets added back as income (correct me if I am wrong).</p>
<p>Yes, IRA or retirement contribution for that year is added back as income. However, IRA savings are not counted as asset. If you go through a simple calculation, contributing to IRA actually reduces your financial aid potential for the following year. This is mainly because tax savings will essentially be counted as income that will increase your EFC on FAFSA the following year. There are loopholes in FA process, everyone takes advantage of it, some more than others. Just like tax, some people are willing to go to great length to pay less especially when the penalty for misrepresenting on FAFSA seem to be almost nonexistent.</p>
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<p>Amen. You don’t know what medical bills or support they are giving to relatives. You don’t know how they got their homes, cars, or other goodies. Counting other people’s money never gets you anywhere. Let it go. You will find much more peace in letting go, versus mentally toting up your neighbors’ assets and resenting any “unfairness.”</p>