<p>Having just completed a bunch of NPC's for several colleges I was disturbed by the value of your business question. I know the NPC's are most heavily weighted by income but then why even ask? It isn't like you can draw from the value of your business to pay college costs. your business is what creates your income.
Also I don't care for the inclusion of K1 "income" as considered earnings, a profit shown on paper doesn't represent income taken by a business owner.
It is what it is. I just don't care for it.</p>
<p>Well, the answer is simple then. If you don’t care for the way certain schools calculate your financial need, then just don’t apply to those schools. Or, even better, don’t apply for financial aid at all.</p>
<p>It is you, after all, who is going to the colleges, hat in hand, begging for assistance to pay your fees. It seems rather presumptuous to me that you not only expect them to assist you, but also want them to do it on your terms.</p>
<p>Great kid…sounds like family owns a business. Just an FYI…the estimate you get from the NPC probably won’t be very accurate because of the owning business component.</p>
<p>Pretty presumptuous dodgersmom. I don’t recall “begging for assistance to pay my fee’s”. Perhaps you will point out where I expressed that?
Thumper1, Thank you, I am a partner in a business, it is myself and one other owner. With The NPC being so heavily income based will the value of the business that is attributed to me influence the correct NP? If so how to I go about receiving an accurate NP?</p>
<p>If you own your own business, you won’t get an accurate estimate. Business owners don’t do well with aid requests because of how schools calculate. They will add back in some of your deductions to make your income higher.</p>
<p>If you’re asking for aid, and you need aid to afford college, then be sure to have some “back up” financial safety schools on your list that will give you large merit scholarships in case the other schools think you don’t need much need-based aid.</p>
<p>BTW…anyone applying for FA is essentially asking/begging for money. It may not sound “nice” but it is what it is.</p>
<p>Thanks M2CK’s. It didn’t sound nice and it wasn’t nice. Isn’t it prudent to run NPC’s? I know the answer to that. How do you know what your potential circumstances are unless you do that? I don’t see that as begging for money. We do have pure financial safeties and schools that will be generous with Merit aid in our mix.</p>
<p>It is expected that you to tap all sources of your money for tuition before you ask other people to pay for it. Small family businesses are protected.</p>
<p>K-1 income from a partnership is exactly the same as taking a wage for that amount… who are you trying to kid?</p>
<p>I expressed that I was a partner in a business. That isn’t exactly accurate. My partner and I are executive officers of a sub chapter S corporation. We commonly refer to one another as partners.
I am not trying to kid anyone. We couldn’t possibly pull all the “profit” shown each year (if there is a profit) and still meet the ongoing expenses of our business. So there can be a significant amount of K1 income that I pay personal income tax on that I haven’t had the use of personally. It would be common for approximately half of the amount shown on my K1 to be actually dispersed to me.
I would welcome comments in regard to how a business owner goes about getting an accurate representation with Net Price Calculators.</p>
<p>Those who are self employed, students with divorced & remarried parents who aren’t cooperating and people who have been low income for years and who are trying to make up lost time by increasing their contributions to retirement accounts, all get basically um screwed by the CSS Profile.
I believe FAFSA is a little kinder & thank goodness there are still schools which don’t require PROFILE.</p>
<p>Presumptuous? I don’t think so. Each school’s costs are listed on their website. You don’t need to run the NPC to find out what your cost will be . . . unless you’re hoping for need-based aid. And that means you want someone else to pay your expenses. That’s not a terrible thing . . . college is expensive and a lot of families need help paying for it. But, as I said, you don’t get to ask for help and set the terms for how help will be awarded. If you want to spend someone else’s money, it’s not unreasonable to expect you to be gracious enough to do it on their terms.</p>
<p>And yes, it sucks that business assets are taken into account when you couldn’t possibly sell them. But do you really believe that you are similarly situated, financially, to someone who has no such assets?</p>
<p>If anyone is interested in providing constructive information I am appreciative to hear it. Otherwise please skip right on by my posts. I have no interest in defending myself against assertions I haven’t made.
In addition to NPC’s indicating what Financial aid may be received from a school, many of them also can be indicative of what merit aid may be possible. That was my primary interest with the exception of a couple of Ivy’s that can be very generous.
I am not begging, I am not of the impression that my family should be favored given our financial circumstances etc. Just doing my due diligence!</p>
<p>“Isn’t it prudent to run NPC’s? I know the answer to that. How do you know what your potential circumstances are unless you do that? I don’t see that as begging for money”</p>
<p>Yes, it is prudent to run NPCs if you’re asking for financial assistance. Just the mere running of a NPC isnt’ considered to be asking/begging for money. I think the post was in response to your complaint that different schools vary with their aid amounts. When you’re going to be asking/expecting aid, that’s (in some way) begging for money.</p>
<p>You are hoping for need based financial,aid. Maybe that is a good way to put it. I will take issue with the term “begging”. We completed the FAFSA and Profile forms for both of our kids…because you just never know if you will qualify for something. I don’t call that begging. However, as anyone who has read my posts knows…my kids got merit awards, one smaller than the other, and we paid the bulk of their expensive private university costs.</p>
<p>To the OP…in your situation, you will not likely get an accurate read using the NPC. You just won’t.</p>
<p>Some colleges will give an “early read” estimate. That could work for you if the college will do this.</p>
<p>In your situation, it will be very prudent to cast a wide application net which includes affordable schools, or schools with guaranteed MERIT aid based on your student’s stats.</p>
<p>Certainly your kiddo can apply to some financial reaches, but please, if you have financial limitations, please let your student know BEFORE applications are sent so they will KNOW what the financial limitations are…and that the final choice take the finances into consideration.</p>
<p>It’s an asset like anything else, and in a free market it does have value. The business could have real estate or receivables or inventory or even goodwill. But it is an asset and it does have value, which must be considered when one is asking for aid.</p>
<p>This issue can be much more complicated and the OP has a point. Here are two examples. 1. I have a side business that earns 30k per year performing a service for a friend’s business. I can’t sell the business to a third party because my friend would just pull this work in-house, and there are no assets to borrow against. It is like a job, really. The income obviously counts in the financial aid calculations, but the business can be assessed a value of $100k or more if a standard multiple is applied to the revenue. Tough result because if I was paid as an employee for doing the same thing, there would be no “asset” for FA purposes.
2. I own 25% of a business that is financed with loans and has been growing and using its cash to finance inventory and receivables and pay down debt. It is a subchapter S corp so the taxes pass through. So on my tax return, I am showing income of say $25k in income, but I never receive any money from the company. Tough again because this “income” is not available to pay for college, plus I would also have to report a value for this asset.</p>
<p>Bonard…but at the end of the day…you HAVE those businesses. It is not the responsibility of the financial aid folks to award need based aid so that you can continue your business. Sorry…it just isn’t.</p>
<p>A business that you cannot sell arguably has no value, however S Corp earnings & cash flow are available to the owner upon receipt.</p>
<p>From an FA perspective, it appears that one is definitely better off working for a company at a salary than owning your own business. As a partner in a small law firm, I essentially “own” my job. My partnership interest has no value other than used office equipment and accounts receivable for work already completed but not yet paid. If I died or tried to sell my practice, my clients would just go elsewhere. This is likely true of any personal service business. So there is no way I could tap the “value” of my business to pay for college. Had I known this a few years ago, I guess I could have taken a job with a state agency, gone in-house at a large corporation, etc. in the hope of qualifying for FA. Oh well, too late. May not seem fair to those of us in that position, but that’s just the way it is.</p>
<p>The K-1 income is basically the net income AFTER expenses… now it is true that sometimes there are tax/cash timing differences and you may have some cash flow issues if you pull all the cash out. But to sit here and say that 1/2 of the k-1 income income is unavailable is simply not true.</p>