<p>Our eldest daughter has been accepted to her "dream" school - U of C. She has been offered a merit scholarship, but has been denied aid. I'm looking for any parents in the same situation where your adjusted gross income on tax forms is significantly more than our actual income. We've contacted the FA Office who argues that we are buying down debt with that money, which is true. However, we are making our minimum payments to the bank and if we did not, we would not have a business. Bottom line, our gross income is actually about $90,000. Is there anyone that can offer us any advice? We've had letters drafted from our banker and our accountant and our business accountant is drafting one as well to explain our situation. U of C says they'll review in March.</p>
<p>Unfortunately, you are likely to face a similar problem with almost any “profile” college, although I think Chicago has an especially tough reputation with regard to family businesses. You may well succeed in your appeal (or you may succeed in your appeal with some other college), to the extent you can show that you are building up the level of equity or working capital necessary to produce an annual income of $90,000, and not that you are loading value into your business that you will reap later when you no longer have to pay Chicago anything. And at some level, they are probably right, and you probably DO expect to realize additional value in the future from the equity you are building in the business today. There’s no perfect solution, unless somehow you can take equity out of the business by borrowing, and without collapsing the business.</p>
<p>I’ll add two things: (1) Part of the problem is that attorneys and accountants in the city of Chicago – many of them affiliated with the University – practically invented myriad ways for private businesses to hide their income from the IRS and other creditors. Not all small businesses do that, but there is a jaded attitude that is based on experience. (2) I suspect lots of the policies and practices in the financial aid office have survived unchanged from a time (not so long ago) when it was much easier to borrow money against the value of a private business for consumption outside the business. Those policies will have to change, but change takes time, and it’s not easy.</p>
<p>This thread mentions that University of Chicago is known for being “strict” or “tough” when it comes to valuing a small business, I believe. What about Notre Dame and a self-employed person? Husband owns some equipment that is used to generate revenue. What all would ND “count” towards the EFC in terms of my husband’s employment? We have a CPA do our taxes each year, FYI, and there are many Schedules related to his self-employment. Any info/advice is appreciated. Thanks.</p>