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<p>Another good question. Realistcally, how do you go about getting a business loan for a value that is not there in the asset as stated in the first premise? And furthermore, what do you tell the loan officer what you are going to use the money for when in truth it is for your kids tuition? Now if it is not a business loan, can you deduct that from the balance sheet of your business? Again, this whole thing makes no sense to me.</p>
<p>^We also have the problem that banks have tightened up on lending and you can only have so many mortgages with your name on them. So getting additional equity loans could be a problem. Not that any school gives a hooey about that. I would think you could deduct it from your business assets because they want to know how much you would net if you sold the business (in which case you would have to pay off any liens) so you would net 10-30K less after paying the loans.</p>
<p>^But my point is how do you take out a business loan that put a lien on your business to pay for college? The bank is going to look at you weirdly and tell you to go take out a student loan. If you get that student loan, is that a lien against your business? I don’t think so. How could you add the loan that pays for your kids tuition as a liability against the business? And the interest incurred is a business expense? A student loan should have nothing to do with business financial statement. I guess you can do hand waiving and claim it is a lien against the business and adjust the CSS number accordingly but is that the right thing to do?</p>
<p>I agree that it doesn’t make a lot of sense, but if the school thinks you should do it, and certainly lots of posters here seem to agree with them, then? Personally, I think the bank’s reaction would depend on the situation. If we extend one of our home equity lines, they don’t ask what we plan to do with the money. It’s OUR equity, we have some “right” to it as it were. Maybe.</p>
<p>It is not a matter of what anyone think including the schools. It is a matter of what happens in reality. That was my point all along about this. Please tell me if you or anyone knows how you do this in reality. If it does not happen then it is basically a way to penalize a small business owner that goes beyond simple equity in a home or an asset that can be sold. And I presume some schools do not even count home equity and various other assets for this calculation.</p>
<p>The whole problem with any of The PROFILE schools is that you can’t see what they do. It’s not even that easy to see which schools count home equity, and the various caps that schools put on it if they do count it, and which school require the full amount to be included in assets. It’s like pulling teeth to get that info. </p>
<p>So how the heck one can pick and choose among the PROFILE schools as to which ones will view your business the most favorable and what you can do to have them so view it, is nigh impossilbe. Another frigging lottery. There are a group of schools that do use the same basic methodolgy, can’t remember the name they go under, but even with them you can get an aid package as much as $10K apart.</p>
<p>I’m actually looking forward now to the finaid packages. While we don’t have a business we have land and rentals. This is my first student that has a true ‘mix’ of public and private, meets need and doesn’t guarantee to meet need colleges. Fortunately he’s got a “first choice” among his already in the pocket public school acceptances and with the merit awards already given we have pretty predictable costs but we are both looking forward to the privates RD outcomes. our flagship uses Profile, but guarantees to meet need for instate, but again costs are predictive. The calculators are saying the private costs should be very similar…within a couple thousand dollars. All people can do is ensure they have a good mix and wait for the outcomes when dealing with the private education structure.</p>
<p>cpt, well said. It seems to me, the more of a lottery or mystery the process is, the more applications they will get. If this was more deterministic and transparent, everyone will have clearer idea where to apply instead of this aura of all these unknowns that we have to apply to so many in case things don’t work out. If you want to try to bring the cost down, maybe this is one area to look into to legislate and make it more transparent. Imagine a credit card companies or banks telling you to apply first and then we will give you the terms when we accept your application.</p>
<p>Well, there are credit cards and loans, including private college loans that do operate that way, Ttparent. You apply and your credit score and other things on your app along with that of your co signer determine the terms offered.</p>
<p>Not exactly, it is more like you get the terms based on your credit score and then you apply. And banks/lenders compete based on the terms they can offer you before you apply. This requires that the banks disclose the terms before you apply instead of you applying to 10 different banks to find out what the best terms you can get.</p>
<p>I see what you mean. The tricky things with colleges is that they don’t even have to be consistent person to person, so it 's difficult to figure out where your particular situation will be best received. Though I do recommend the OP and anyone with unusual asset situations including business ownership to find a school that meets full need and has no merit money to give an estimate of a package, even that is not going to necessarily be indicative of anything other than for that particular school.</p>
<p>I’m trying to figure out what this process reminds me of-- shocker sticker price & unknown, uncalculable discount. My first thought was our Byzantine health care system, but maybe the better analogy is one of those scratch off stickers that tell you your discount only when you’re loaded up at the register.</p>
<p>“I see what you mean. The tricky things with colleges is that they don’t even have to be consistent person to person, so it 's difficult to figure out where your particular situation will be best received.”</p>
<p>Again, I am asking why can’t they? Why does it have to be this way?</p>
<p>I think you hit one of the reasons above, ttparent - more applications. If we could know exactly what the school was going to do, maybe we wouldn’t bother applying there. And that has been true for us in regard to SOME schools. Another reason might be simply that there are so many possible different situations that determining a solution for everyone in advance of their applying would not be possible. They want to be able to evaluate case-by-case when it gets down to the nitty-gritty. I do think that with the advent of computer capabilities, they could present a more detailed “analyzer” which would get better results for people in the unusual situations.</p>
<p>It doesn’t HAVE to be that way. But when you are talking about a college’s own stash of funds, they can distribute it as they please. They practice all sorts of enrollment management to stretch the money the farthest and to get the students they most want. There are only a handfull of schools that are not only needblind but are impartial in how they distribute the packages. The young man from Mississippi might be rated an “A” for desirability for geographic reasons as well as being male at school that is looking for geographic diversity and is trying to keep the M/F ration from getting too lopsided. The "A"s on the list that is given to fin aid would get the goodies in terms of the package whereas the C’s would not. And that could be at a school that is need blind and gives 100% need to the students. The "C"s get workstudy and loans and the "A"s do not. Get into the area of schools that do NOT guarantee to meet need and/or are not need blind in admissions and you get all sorts of possibilities. </p>
<p>The reason that it is this way is because the schools want to be able to choose rather than just sticking all of the candidates in the computer and let the program distribute the aid evenly. The whole process works that way. In the admission process, students aren’t admiited in order of rank in a set formula either. “Holistic” is what they call it.</p>
<p>For all we know, they may be consistent student-to-student, but we don’t know the criteria they use, and it may change from year to year. Just as we don’t know the little details that set certain students apart during the admissions decisions, we also don’t know the nitty gritty in the aid process. I doubt there are many situations where 2 students have identical profiles.</p>
<p>You are right CTScoutmom. And I am sure that there are some consistent practices. There has to be as one cannot reinvent the financial aid calculator wheel for each student. Which is why when the two posters, one ED to Swarthmore, the other to Middlebury, reported that the schools were treating the family businesses a certain way and refused to change the awards, I felt that other such schools, PROFILE ones in particular would likeley value the businesses the same way. Can’t tell for sure, but those students would be wise to start looking at some FAFSA only schools and lower cost alternatives because the likelihood of another school coming up with better fin aid numbers than those LACs was small.</p>
<p>Sorry for the delay in responding, but I just want to jump back to the issues raised in posts #17 & #18. My original post was misunderstood. My son attends a Profile school. My point was that the Profile school twice adjusted the value of our business down to zero on FAFSA and, even though as others have pointed out we do not know the precise Profile methodology, this school has met our full need. So I can only assume that they also valued our business at zero in the Profile calculation.</p>
<p>I did look at FA statistics for our school. 47% of all undergraduates were found to have need; 98% of those received aid. 15.5% had their need fully met; average percentage of need met was 81%, all for the 2011-2012 school year.</p>
<p>I get that the treatment of our business appears to be unusual. I am just cautioning not to assume that every Profile school will automatically penalize a small business owner. Again, YMMV.</p>
<p>Agreed, Archiesmom, and I’m glad you found a school that did assess your business favorably. The problem is how does one know which school to pick where that possibility exists? Clearly that group of schools, can’t remember what they call themselves, with the highly selective LACs, do not tend to do so, as their methodology is supposed to be very similar. Catholic schools tend do do so differently, I know, but usually not to one’s favor. At your school there is only a 15.5% chance of getting need fully met, with the average percentage of need met about 80%, which does not bode well on average for high need kids. But then with the way business owners could be treated, that could tip the scales. But how does one get all of this info. I do know the particulars of a few schools on how they treat a few things, but if I had to pick a list of schools, trying to get the best batch for the best possible aid packages has worse odds than a crapshoot with all elements that are so unknown. Also, we have no idea whether it was just the way your particular business is configured and the lack of profit or income that may have had them treat it that way. I wish there were more transparency. Right now if someone who owns a business and has come up with a NPC result that shows good finanacial aid possible at an otherwise unaffordable school should ask for an early read of their situation since the business can throw out the results completely. Otherwise, they are in for a rude awakening on a number of PROFILE schools come April.</p>
<p>COTH, I agree with everything above. We did not expect to have our need met at any school. It was by chance that our son ended up at a school that actually did. I know that there’s not enough transparency on FA calculations and we were just lucky given the school’s stats as cited. My only point was to put one story out there to combat the generally accepted theory that all small business owners are at a disadvantage.</p>
<p>That said, one should also know that our EFC (and our actual contribution) has been in the high $20k for the past two years, so it’s not like meeting full need meant a small bill for us.</p>