This family is from outside America. I don’t think they can fill out FAFSA?
Well…then there is even more clarity for this international student.
On the Profile, this family will be required to list ALL real estate holdings and equity in them…and the rents from the rental property (their half). This won’t depend on the college.
Some colleges also have their own financial aid form…and that will need to be completed if it is the case.
I’m curious to know what the OP thinks will depend on each college in terms of what is required.
This is my question…what does this OP think will vary from college to college…when the vast vast majority will require the Profile or an equivalent form for this international student.
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Maybe I explained myself wrong. Indeed, almost all NPCs ask for family assets.
My guess is you experienced a bit of a time zone issue.
In any event, I think people just wanted to make sure you were aware that you would be reporting both the rental income and the asset value, and that likely each will be assessed when it comes to determining your EFC.
I note marginal parental income is usually assessed at a far higher rate than parental assets, but it is typically a sliding scale and a few, mostly famous, colleges are setting high standard amounts below which the assessment of income is 0%.
Colleges are also free to set parental asset assessments as they see fit, and usually the most important variable to many families is how they assess a primary residence you own. They could assess your net equity in your primary residence at their usual rate for parental assets, or not at all, or cap it, or provide a standard deduction, or so on.
As for other parental assets, I am personally unaware of any actual cases where a college set the general assessment rate for any parental assets at 100%, or indeed anything remotely close to that. I am similarly unaware of any case where they did something like that specifically for rental properties as opposed to other parental assets. But at least hypothetically, anything is possible.
Finally, the NPC should reflect a college’s particular policies on this subject. So, they should in some way require you to include both the rental income and asset value, and they should then apply their assessment functions to the information you give them to estimate your EFC.
And the answer to your original question is yes, if they just ask for a total value of parental assets and do not have a separate question for rental real estate, you should include the $250,000 in your answer to that question. The implication is that they do not assess rental real estate at a different rate from other parental assets, and then they will just apply their parental asset assessment function to the total.
And your rental income should also be included somewhere in the income questions, although again it might be lumped in with other sources of income in the relevant question.
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Thank you very much again.
It is clear that those $250,000 must always be included in the forms.
Regarding rental income, “Playing” with some NPCs I have found forms where they did ask for rental income and in others they did not ask for it.
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If the NPC didn’t specifically ask for the rental income, consider it an oversight and not reflective of the school’s policy. The CSS or whatever financial forms the schools use will ask you this, so if not asked, still include it in any of the NPC income fields to see the impact it may have.
Regarding schools potentially assessing investment real estate at very high rates and/or flat out expecting the asset to be sold to fund college, as thumper mentioned above…this is not an uncommon practice at any number of schools, including those with generous FA. There have been plenty of posters just here on CC saying X school expected me to sell farmland/insert investment asset to pay for college.
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So in the US, rental income is included in what we call adjusted gross income (AGI):
For US applicants, a NPC will virtually always ask for AGI. So even if it is not specifically asked for, rental income is typically included through AGI.
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So in the cases I have personally seen like this–which are in fact commonly shared on social media–it has worked something like this.
The parent has a large non-divisible asset. This could be real estate, a business, a farm, or so on. For the sake of illustration, let’s say the net value of the asset is $1M.
The college then assesses this asset at something like 5% a year, which is $50K. Over four years, assuming no change in net value, this could add up to $200K. As an aside, if you then borrow against the asset, the net value could actually go down.
Anyway, the parent then complains to the college that they don’t have $200K, and want the $50K/year in need aid. And they feel like the answer from the college is something like, “We’re sorry, but you could borrow against the asset, or sell it.”
Of course from the college’s perspective, they are also saying that the $50K in need aid is going to go to an otherwise similar family that has no such $1M asset. And they think that is a justifiable allocation of limited resources.
But the parent in question sees this as a case where the college is not making it possible for their kid to attend. And they are distinguishing themselves from other parents who might have $1M in divisible assets, like stocks, say, who can more easily sell 5% of those to get the $50K. And do it every year as necessary.
OK, so I am not in any way suggesting this does not happen. However, it did not depend on the asset being assessed at 100%. In what I have seen, it was typically just a result of the asset being assessed normally.
Now if people are aware of cases where it actually was assessed 100%, I’d be really interested to see one of those cases. I am definitely not saying it is theoretically impossible. I just personally have only encountered cases of the above kind (several times now), but never a case like that.
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They ask for assets…but some net price calculators do not break apart secondary real estate equity. And at many schools, that is treated differently than money in the bank.
I didn’t say 100%! I have not personally encountered that, but the reality is most people have zero visibility to the actual formula the school is using, unless they asked for those details.
What’s important to remember is that CSS schools can and do weight assets and income differently in their financial aid policy/EFC calculation (which should be reflected in their NPC, but well, we know NPCs aren’t always accurate).
Exactly.
So taking a step back, as we discussed recently in another thread, I think one of the many ways in which a family can be advantaged in this process is by having better information about their potential financial aid options and net costs of attendance.
To that end, there are multiple pieces of information that could be helpful.
One is just to know about the existence of NPCs. If you have a particular college of interest in mind, this is obviously where you should start. Even then, however, you might, like the OP, have some questions about exactly what to report and where in an NPC. And it is true NPCs are only an estimate, they may have errors, they may not capture edge cases, and so on.
OK, in addition to knowing about NPCs, I also think it is very useful to understand how the CSS Institutional Methodology (“IM”) works, at least if you are potentially looking at CSS colleges. This of course should never trump an individual college’s NPC, and indeed one of the first things anyone should know is that colleges can vary from the IM pretty much however they want.
But knowing how the IM works is useful when, say, you don’t yet have a fixed list of colleges in mind, but want to understand generally how different scenarios are likely to affect EFC calculations at CSS colleges. This is particularly likely to be useful when you are well in advance of actually applying, but various financial decisions you make could have implications for what might happen when you do apply.
I also think it is useful just to better understand what might be happening when different colleges give different need-based aid offers. Once you understand the basics of the IM, you can also then understand the common variations from the IM. And usually, most of those differences will be explainable largely because of different choices among common variations.
With all this context in mind, the point I was making is if people hear stories of parents complaining a CSS college wants them to sell an asset to pay for college, they should understand that does not necessarily imply that college assessed that parental asset at higher than the usual IM rate. Once you have the basics of how the IM works, that is pretty easy to understand.
That said, if there are cases where a specific college actually assessed some particular parental asset at higher than the usual IM rate, that would be very good information for people to share.
Similarly it is potentially useful to share information about which colleges assess certain parental assets at a lower rate. A common example is how some colleges assess your primary residence more favorably than other parental assets. And some don’t, and there are different common variations. That is all good to know.
But my feeling is we should not lump together these scenarios, and definitely should not assume a “forced to sell” case was a case of an unusual assessment rate. Because I don’t think that is going to help people really understand these issues better, or help them plan better, or investigate their options better.
Colleges that use only the FAFSA to determine need based aid don’t use the primary residence equity…at all. Because your primary residence is never even mentioned on the FAFSA.
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Indeed. My post was referring to CSS colleges, their use of the IM, and common variations from the IM. But it is also good to know that some colleges are not CSS colleges in the first place, and others can be CSS colleges for some types of applicants and not others.
Here is a helpful chart to help sort that out:
https://profile.collegeboard.org/profile/ppi/participatingInstitutions.aspx
I mentioned Yale as an example of a CSS college, and if you go down to Yale there are actually six different entries. Only Yale College is an IDOC user (more below), and then only some Yale subunits use the CSS Profile for noncustodial parents.
For those who don’t know, IDOC is a service where the College Board collects applicant documents and then sends them to each subscribing school. A college can use the CSS Profile, but also not use IDOC.
National Association of Intercollegiate Athletics
Thank you folks. Several people have clarified what this is for me.
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