<p>Family member with child who is junior in hs is currently unemployed. He has an income stream from a commercial rental property that is on a long-term lease. He owns this property in partnership with a sibling, and both derive annual income from the rental. The property was left to them by their father. He cannot sell the property--brother cannot buy him out.</p>
<p>Spouse is terminally ill and not working at the moment. They have a modest mortgage on a house that is worth twice what they paid for it. There is a younger child, too.</p>
<p>When it comes time to apply for financial aid, how will property/income be treated? Can they make them borrow against a property he does not wholly own? Right now rental income is their only income.</p>
<p>They can’t make him borrow against anything. But the income from the property will be treated as income. And he will have to report the value of his half of the property, which will be treated as an asset. On FAFSA only 5.6% of the value of assets over the asset protection allowances will impact the EFC.</p>
<p>The fact that he can not sell the property does not make a difference. it is still an asset that must be reported. Just like a share in a trust must be reported even if the person can not sell their ownership in the trust.</p>
<p>Thank you swimcatsmom,
So let’s say relative’s annual rental income is $60K and total household income is $70K. They have a savings account of $250K (thats it for retirement, college, etc). Terminal spouse who has no long term disability insurance and will likely have to start paying COBRA payments of #1,200/mo to retain family health insurance, what is your average financial aid office going to do? Child is Top 2 inclass of 500 in IB HS with strong science/math creds and interst in engineering</p>
<p>Any savings in actual retirement accounts (401Ks, IRAs etc) does not have to be reported on FAFSA. </p>
<p>A $70,000 income will generally be too high for federal grant aid. However, if there are high medical bills uncovered by insurance, they should be able to ask for a special circumstances adjustment to reflect that. This is at each school’s own discretion. I don’t know how cobra payments would be treated. They need to ask the school.</p>
<p>Each school has their own policies. he should probably apply to a good variety of schools to maximize his aid options. If he has really good stats then they should make sure he applies to schools where he might qualify for good merit aid.</p>