Special circumstances, EFC *way* too large - help!

Paying for College
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<p>So my parents and I just completed the FAFSA and are working on the CSS profile. However, the EFC given by the FAFSA much more than we can afford (by about $20,000..:( ). My family is in a unique financial situation - my parents are currently in the process of buying a business, so about half of their income must go straight back into the business (they are legally required to do this). So the problem is that on paper it looks like my family makes about twice the amount of money it actually does. </p>

<p>Is there any way to make the financial aid officers aware of this?? Most of the schools I'm applying to have "meet 100% of demonstrated need" policies, and all the officers at info sessions, etc. have said that cost is almost never a reason people choose not to go to their school. But for me "demonstrated need" is only about half of actual need....what should I do??</p>

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<p>You will very probably do better at FAFSA only schools that don’t look at the business if it has fewer than 100 employees. </p>

<p>Most families think their EFC is too high. Colleges don’t see themselves as just another expense, they believe families have been saving for it, will borrow for it and contributing out of current income is just one factor.</p>

<p>Owning a small business often makes financial aid very complicated. Most Profile schools will look at a business that you can borrow against. They will often add back tax deductions the IRS allows. Businesses are not legally required to put half of profits back in the business unless the buyer made the choice to agree to do this. Colleges may have an issue with a family doing this when they have a child to send to college.</p>

<p>Hopefully there are safeties you can afford on your list. After that you’ll need to explain your situation one by one to colleges that accept you. However, don’t expect too much sympathy, many families are in this position.</p>

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<p>I agree and hope that you have applied to a variety of colleges that may award you some merit money because colleges that meet need, meet the need they or the federal government determines. Did you talk to your parents when you were doing college applications so you don’t have a bunch of expensive colleges on your list if your parents are planning on putting money into purchasing a business? As a lesson for parents that might be reading, it is important to run financial aid calculators and understand how you will be viewed by colleges so you can help your student select appropriate colleges.</p>

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<p>Why is the business income co-mingled with the personal income? The income that “has to” go back into the business should remain in the business account and taxes. I don’t know if this would help in your situation. My H pays himself a wage from the business, which he issues a W2 for and records on our personal taxes. The FAFSA does not care about line 8 (I think it is) from the 1040, which comes from your business taxes, but they do care about overall AGI, which does include line 8.</p>

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<p>^I think it is part of their personal income though, I’m not totally sure how it works to be honest. And I do already have really good merit scholarships/some full rides at other places, I just feel like I’ve worked my *** off in high school to get into top 20 schools only to not be able to afford them because of something that’s completely out of my control (I suppose lots of people feel this way though).</p>

<p>Thanks for the input guys, and any other advice would be greatly appreciated.</p>

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<p>The basic issue is that your parents made the choice to spend their money that way. I know it’s out of your control, and it thus feels unfair… but in terms of need-based aid (which is already highly limited and very competitive), colleges look at the students whose families aren’t even in a position to make that choice.</p>

<p>I’m sure you’ll find a great place to go to college :)</p>

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<p>* so about half of their income must go straight back into the business (they are legally required to do this). So the problem is that on paper it looks like my family makes about twice the amount of money it actually does. </p>

<p>Is there any way to make the financial aid officers aware of this??*</p>

<p>I’d be surprised if FA offices will take that into acct. Otherwise, every business owner would set things up that way to get more aid. </p>

<p>Most of the schools I’m applying to have “meet 100% of demonstrated need” policies, and all the officers at info sessions, etc. have said that cost is almost never a reason people choose not to go to their school.</p>

<p>These people would have NO IDEA if that’s really true since many students just decline and don’t give a reason why…or just say that they’re going somewhere else. Those who don’t qualify for as much aid as they’d need often just accept it and move on.</p>

<p>*You will very probably do better at FAFSA only schools that don’t look at the business if it has fewer than 100 employees. </p>

<p>*</p>

<p>The problem may be that the FAMILY income is too high to qualify for the needed aid since the family has to put income back into the business. Even those with smaller businesses have to declare their income. It doesn’t look like the problem is that the business is worth too much money.</p>

<p>*And I do already have really good merit scholarships/some full rides at other places, I just feel like I’ve worked my *** off in high school to get into top 20 schools only to not be able to afford them because of something that’s completely out of my control (I suppose lots of people feel this way though).</p>

<p>*</p>

<p>it’s a good thing you have back-ups. Yes, it’s frustrating, but it’s not the schools’ fault. As Polar mentions, your parents decided to make the financial decisions that they did. </p>

<p>many, many kids “worked their hineys off” in high school to get top grades and top scores…yet, they still can’t go to a top 20 school because of finances. that should never stop anyone from achieving one’s dreams. the dream is not the college…the dream is the CAREER.</p>

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<p>g30rg3, I know it’s hard, but I suggest you try to reframe this in your mind: </p>

<p>“I do already have really good merit scholarships/some full rides at other places, I just feel like I’ve worked my *** off in high school to get into top 20 schools only to not be able to afford them.” </p>

<p>to something like this: </p>

<p>"Because I worked my rear end off in high school, I have really good merit scholarships and some full rides. I won’t graduate with a lot or any debt, unlike TONS of other students who didn’t work to get the grades and opportunities that I have.’</p>

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<p>^like…</p>

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<p>Actually, this is NOT a particularly unique situation. There are lots of other families who own businesses of some sort. In many cases, they find the same thing you are finding.</p>

<p>It does sound like you do have some affordable options for college. That is a good thing. At this point, your finances are your finances…they are NOT a “special circumstance” in the financial aid sense, and likely will not gain you aid at any school. So…just fill out the forms and wait and see.</p>

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<p>(sigh)… thanks guys. I guess I’ll just hope for the best :)</p>

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<p>There are also people who work their hineys off without ever being able to produce a transcript that will get them scholarship money anywhere, or even secure admission to a respectable school – that’s not fair, either, but the college admissions process offers many examples of the “life is not fair” concept. I agree that the career is the goal, not the college, and you can get a good education in a lot of places if you are motivated. The OP sounds like someone who will probably be able to walk out of many colleges with a good skills set and a marketable resume. It is wonderful when we see family financial preparation and student academic preparation all come together into a charmed experience at a most sought-after school, but it’s not the only way to have a fulfilling experience or to prepare for a worthwhile career.</p>

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<p>Ok, so now that the admissions process is over, I thought I would conclude this thread with how FA actually worked out for me, in case anyone is in the same situation.</p>

<p>Even though the combined income of my parents was a little over $200,000, I still got over $30,000 in FA ( :slight_smile: ) after my parents visited the FA office and explained our situation. There is hope! To anyone in this situation, I would highly recommend personally visiting the FA office of your school to explain your situation - it could make a huge difference.</p>

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<p>Well, before anyone else gets false hope, it looks like the school was Harvard, Yale or Stanford. Those 3 schools give super aid…the other schools wouldn’t have been so generous…not with an income of over $200k. </p>

<p>You were lucky. Congrats.</p>

<p>Did the school indicate whether this is a one time deal while your dad gets his business off the ground? It would be hard to believe if they continued to be this generous for all 4 years.</p>

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<p>I can’t imagine how the school would guarantee need based aid for more than one year. Students need to reapply annually and next year the aid will be based on info from the 2012 tax year.</p>

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<p>Right…what I meant was… The argument was that the dad has to put half of the business income back into the business, so aid that wouldn’t normally be given for that income was granted.</p>

<p>however, I would think it odd if the school gave the special consideration every year. The dad could earn $300k next year, so would the school only consider his income as $150k?</p>

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<p>So, did the parents hope this would happen and use the purchase of the business to reduce their assets, etc and increase the aid? Could it be they had some wise financial advisor who knows how those Ivy’s handle FA??? If they HADN’t bought the business the FA would be lower? </p>

<p>Good point to take away is to visit the FA office when in doubt…and maybe to buy a business if you can afford it! (AND suppose the business has a “loss” that may help next year, right?_</p>

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<p>Probably he bought a franchise and he has to invest a minimum on the business per franchise agreement. I think that’s the most probable reason that FA approved it since it was a mandatory legal obligation.</p>

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<p>^^^</p>

<p>Right…but the school could have suggested that the parents then take out a loan to cover their EFC because the income potential later is there. The family got lucky.</p>

<p>The school is essentially helping the parents pay for a franchize.</p>

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<p>^^^chill out everyone. </p>

<p>@njfootball mom, they bought their share of the business over 4 years ago - wayyy before they knew I had Ivy ambitions (where I’m from, no one goes to ivies. I’m literally the first person from my school EVER to do so). The school isn’t “helping the parents pay for a franchise,” and there wasn’t some behind the scenes FA advisor lol. Yes, the reason we’re getting so much FA is because so much of their “income” on paper isn’t actually income, as I stated in the original post. And yes, they are legally obligated to put so much money into paying for the business. </p>

<p>Assuming the business is payed for by the end of the year and that debt vanishes, then yes, my financial aid will too probably. But like I said, they looked at our individual situation, in which my parents simply could not afford an Ivy league price tag, and gave me that amount of aid. </p>

<p>The point of bringing this post back up was that you should personally visit the fin aid office of your school if you have any strange circumstances, because it could make a huge difference. Maybe not, the aid did come from an uber-generous school in my case. But still.</p>