I read about how if your parents own a small business the income isn’t counted as part of your assets. My parents income is about 120k annually, but as my parents explained to me that money often goes right back into buying product to sell (convenience store). They reported their income as salary and wages as opposed to business income as they reported a self paid salary. Would having this changed to a business income lower my EFC? Currently it is at around 30k and that is too much for my parents to meet.
The 2019-2020 FAFSA is based on 2017 data. It’s a little too late to change the structure of your family business for 2017…which has long since ended.
In fact, it’s pretty late to change this structure even for 2018 which will be used for the 2020-2021 FAFSA.
But more important…there is likely a reason your parents have their business structured the way they do.
Conventional wisdom (I can’t take credit for this) do NOT do things for financial aid gain that you would not have considered doing…anyway. In other words…if your parents feel this is the business plan that works for their business…then so be it.
You need to look for colleges that are within their budget…including potential merit aid, and your Direct Loan of $5500 for freshman year…and any savings you have from a job.
How much can your parents pay?
CSS Profile schools will ask a lot more questions about your parents’ business income and assets, and it could very well reduce your financial aid at those schools.
I’m not a convenience store owner…but something in your story doesn’t sound right.
You say your parent income is $120,000 but most of that goes back into restocking a convenience store…would,that be for the full year?
Seems like restocking would not be part of their self paid salary.
The income is counted. It’s the worth of the business that isn’t counted for a family business with fewer than 100 employees.
The $120,000 is the revenue of the business? That’s different from the net profit of the business, which is different from the “salary” they take from the business. Is it an S corp?