What is going on!?

Paying for College
1

<p>I need help figuring out what went wrong with my financial aid at Emory University, aid which I anticipated to be extremely generous.</p>

<p>I'm an incoming transfer student whose family has an AGI of a little over 15,000 and a 108 EFC. One of the huge reasons I applied to Emory was because of its policy of meeting full demonstrated need as well as eliminating loans for families who make less than 50K through Emory Advantage.</p>

<p>I put down the deposit without even seeing my financial aid award yet because I believed strongly that my financial aid was going to be satisfactory. However, my financial award (posted yesterday) says I'm eligible for only 29,000$ in aid, with 10,000$ of that being loans. The estimated cost to attend is much higher at 55,000. Of course, for a lot of people that aid is generous but for my family it's too little. (By the way, my sister is also attending college at the same time!) At this point, I can't go to Emory. It's horrifying- I love the school and have been excited about attending for months.</p>

<p>I think I've made a fatal error interpreting my financial information and would like help understanding exactly what is happening. Here is part of an explanation from the Assistant Director at the FA office, which I still don't really get:</p>

<p>"There has been no mistake in our award. Yes your FAFSA EFC is low because of your family’s tax information, but it is important to understand that Emory uses our own institutional policy to make our final award determination... As a professional I have to use my years of experience to formulate a reasonable level of income to better account for the average income that is needed to sustain your family and their needs."</p>

<p>So wait. They did away with the AGI/EFC on my forms and came up with their own number? How is it possible that an EFC of 108 as determined by FAFSA becomes an 'EFC' of 20,000+ according to Emory policy?</p>

<p>Together, my parents actually make 83,000 a year (this is obviously where the problem lies.) However, if I understand correctly (and I probably don't), the AGI indicates how much a family has left, after mortgage/debt payments, to spend on things like other bills and college tuition. My family's financial history is confusing and even I don't understand it very well. But basically, my parents' AGI is so low because they are tied to numerous failing properties and debts. They invested in real estate years back and are paying for it now. I think the low AGI and the EFC of 108 accurately reflect our miserable financial situation - the 2010 tax year alone the power was cut off several times due to unpaid bills. We're always borrowing from friends and family, and my parents fight about whether or not to file for bankruptcy all the time. Though I'm not a financial expert, I <em>KNOW</em>, living in this house, that we are poor as hell. But Emory doesn't seem to think so...</p>

<p>Basically, have you guys an inkling of what happened? Please enlighten me! Again, the main question: How is it possible that an EFC of 108 as determined by FAFSA becomes an 'EFC' of 20,000+ according to Emory policy?</p>

<p>Sigh. I kept hearing, on this board and elsewhere, that with an EFC of near-zero I should expect almost a full ride at Emory. I don't have an entitlement complex - it's simply what I was anticipating given Emory's posted commitment to meeting demonstrated need. I want to go this school so bad you don't even know. I'm hoping, by coming to this forum, I can better understand my financial case and maybe appeal successfully.</p>

<p>Thank you!!</p>

2

<p>This doesn’t help you, but a non-FAFSA school would make adjustments if they think paper losses or other strategies have been employed to reduce EFC, or, as implied in their last sentence, they think a typical family with that income should have an EFC of $20K. </p>

<p>Given that time is short, you and your parents would probably have to drive to Atlanta and make your appeals and explanations in person. This may not work, though.</p>

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<p>Emory uses the CSS Profile to determine how it awards its INSTITUTIONAL aid. The FAFSA is only used to award federally funded need based aid. Your FAFSA EFC is really not what is important for schools that use the PROFILE…those schools use their own forms to determine the awarding of THEIR money.</p>

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<p>I don’t think this assumption is accurate. Your parents’ adjusted gross income does NOT subtract your mortgage and debt payments. In fact, for FAFSA purposes, your mortgage on your primary home actually doesn’t get mentioned at all…and neither does any other kind of consumer debt.</p>

<p>AGI is NOT what is “leftover” after you pay all your bills. It’s your adjusted gross INCOME.</p>

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<p>If your parents make this amount, your EFC per FAFSA would NOT be $108…it would be more like $20,000. Are your parents self employed? If so, many of the deductions for self employed are added back into the income for families whose kids apply to some Profile schools. </p>

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<p>Do they still OWN this “invested real estate”? If so, any real estate that is not your primary residence IS reported on the FAFSA…and the Profile as well as an asset. </p>

<p>I believe you need to discuss this with a financial aid officer at Emory. BUT you also need to understand that consumer debt is NOT factored into the financial aid formula. This would include your mortgage, car loans, credit card debt…etc. </p>

<p>I’m sorry I’m not more optimistic…but I could be wrong. Go and speak to someone at Emory…and see what happens.</p>

4

<p>Mortgage and debt are not taken into account when calculating FA. If your parents have real estate, I’m guessing those assets that are taken into account by Emory. Also schools often disallow some expenses related to business expenses. </p>

<p>Schools that use profile for institutional aid take into account a lot of things that are ignored by FAFSA. (108 is a very low EFC for $83,000 income).</p>

5

<p>Thank you for the responses. It’s disturbing to think they might be assuming we lowered our AGI/EFC artificially. That’s not the case at all.</p>

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<p>I’m aware that payments for the primary home/essential needs are exempt. However, my parents own several other properties. That’s what I meant when I said they had invested in real estate. It hasn’t worked out for them: the properties have lost a lot of value, and my parents owe much, MUCH more than what they could sell them for. Of course, no one seems to want to buy or rent them anyway. </p>

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<p>It IS 108… Why would I lie? My mother is self-employed, makes about 8,000 a year. My dad is employed by a company and makes 75,000 a year. However, they are being drained by these properties, to the point that my family is on the brink of bankruptcy. Yes, it’s that bad.</p>

<p>I re-posted this in the Emory subforum and got a response that makes a lot of sense:</p>

<p>“If your family’s AGI were also near $83k a $20k EFC is in the right ballpark, and my best guess is that’s what Emory is using here to compute your EFC as they see it (remember private universities dont strictly go off the fafsa EFC and in many cases can use their own method, either a more or less generous one, to compute how much that want you to pay). The assumption w/ financial aid in general is that a minimum amount of money must go to essentials (food, utility bills, primary house mortgage/rent) and that portion should not be forced to pay for your education, while any extra money beyond that is considered discretionary and thus a large portion of it should be used to finance your own education (this is why EFC increases exponentially w/ income). Since the debts your parents are paying that resulted in the low AGI are for things considered non-essential (like the extra real estate your parents bought), in Emory FA’s view they could easily be used to finance your education and thus your low AGI and EFC are essentially considered to be invalid, and my guess here is that FA awarded you the amount based the assumption of a $83k instead of $15k income.”</p>

<p>I responded:</p>

<p>“Ah, that makes sense… I think you’re right that Emory believes the other properties could be used to finance my education. What if I proved this otherwise in an appeal? My parents have tried to sell the properties and failed (even if people wanted to buy them, their worth is much less than what my parents paid for them); additionally, no one wants to rent them. They literally just suck up all our money and do nothing for us. In this situation, is Emory expecting us to foreclose on these properties?.. What if I wrote an appeal describing how the properties cannot be used to finance my education and that the only way to pay for college without more aid would be for my parents to foreclose on their properties, OBLITERATING their credit? They do that and I feel they could never get a loan again (which we’d still need even without the monthly mortgage payments.) Or would Emory not care and expect us to indeed go forward with the drastic last option?”</p>

<p>And from another incoming Emory transfer:</p>

<p>“I am a transfer this fall and I am in a pretty similiar situation. Our calculated Federal EFC was like 1600-ish. However my dad owns his own company, and we also have a house that is a little above average. We know someone that works for Emory and he even tried to appeal for us but here is what it boiled down to: Emory allows $250,000 in assets (like a company, a house, etc etc) and anything above that is like “extra” assets that you should sell/whatever to finance your education… Emory expects you to take money out of those resources. They don’t really care how you do this. As a result I got NOTHING (zip, zero nada) from Emory and 100% of my aid is from the Fed (about 12k, mostly loans).”</p>

<p>Sorry for quoting so much from the other thread. The other thread had a lot activity when I posted it and addressed a lot of the stuff being said here. I just want to bring this thread here up to speed, as I’m still interested in hearing more advice, especially from those who browse the FA forum a lot.</p>

<p>I am going to write an appeal tonight with no expectations that it will do anything. However, I do think I have a case here, where my family’s financial strength is being grossly overestimated. My parents’ credit cards are all unusable except for one, and banks are calling literally all day for their money. In fact, my parents have many letters from banks threatening foreclosure because my family has missed many payments over the years for lack of money. Astoundingly, my parents have managed to cling onto the properties, so as to avoid the destruction of their credit (though it’s already terrible), but it’s costing them everything. Their AGI on their tax forms is 15,000, that’s a fact and no tampering or misinformation was involved. This appeal probably won’t do anything, but I want to be prepared for next year. I can manage 25,000 in personal loans this year, but doing it twice I think will really jeopardize my future…</p>

<p>By the way, I e-mailed the Assitant Director of the FA office hours ago and he hasn’t gotten back to me. I will post again when he does. Thank you everyone for all the advice!!</p>

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<p>Simplistically put, your family is cash strapped but 83K is significant income and you have “numerous” properties! Those numerous properties are assets that Emory is likely seeing as an asset to be sold and coverted to cash for college. The student from a 83K a year family with ZERO properties clearly would be awarded higher aid from Emory.</p>

<p>Like you already said, you made a fatal error and either your parents liquidate a few of their numerous properties or you need to make new transfer plans.</p>

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<p>I noticed that you also have a sister attending college. There is a form you have to file from your sister’s college before Emory will take her college attendence into account. Have you filed that form? Emory used to be a real stickler about it.</p>

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<p>Very sorry about your position.
Your family makes 83k. There are allowances built into the formulae, but investment losses, etc, are not among them. These are viewed as “discretionary” moves- you had the income, YOU chose how to spend it. No, it doesn’t seem fair.</p>

<p>The colleges can choose to ignore the choices the family made that were voluntary.</p>

<p>As I understand it, AGI is an IRS function. It can allow additional taxes, depending on income source (interest/dividends, etc) or reduced taxes, depending on some losses. Many confuse it’s use for tax purposes with how colleges can use it for aid purposes. Under certain circumstances, colleges have the right to rework the numbers on your aid app, as long as they follow standards. That seems to be what happened.</p>

<p>Before you re-appeal, read up. It may help you figure the best position to take. Good luck.</p>

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<p>Thank you so much for the responses. My situation seems grimmer with every response BUT it still feels good to not be so in the dark.</p>

<p>Something I want to address specifically:</p>

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<p>I definitely believe they’re thinking my parents should sell the properties. But shouldn’t it have showed on the tax forms or something that the value owed on the properties is much greater than what they’re worth on the market atm? My mom is telling me that selling the property would mean a hit to our income, because we’d owe lenders hundreds of thousands of dollars for selling the properties at basically less than half of what was loaned to buy them. So if Emory is operating under the assumption that my parents could sell their properties for money, aren’t they being too simplistic? The situation is much more complicated than that.</p>

<p>I doubt my appeal will work this year but perhaps next year? I will try to highlight just how faulty the assumption is that selling our properties would mean money.</p>

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<p>[FinAid</a> | Professional Judgment | Negotiation](<a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid)</p>

<p>I don’t know of where IRS tax forms ask for market value of a property. One thing you might do (AFTER reading this link) is show your parents’ efforts to rent and/or sell the properties. Perhaps try to show some “comparables” from a RE agent. I don’t know if that will work.</p>

<p>Yes, it is simplistic to assume you can turn around a dud property. But, it’s also too easy to assume your situtation compares with a kid whose family only earns 20k. There are many problems with the way aid is calculated and some are being improved. There are ways a FAO can make this better for you, but he/she has to operate within certain constraints. Again, read that link. </p>

<p>You must be nice in these discussions.</p>

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<p>Thank you! Great link. I will definitely be very nice - this whole thing determines the rest of my life!! Also, I feel no reason to appeal for sympathy or anything. My family has many documents from ‘neutral third parties’ that indicate our financial inabilities. I will include as much documentation as I possibly can in the appeal.</p>

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<p>Here is the bottom line: Most schools that guarantee to meet 100% of need define the need in the way they choose to do so. It rarely is the same as the FAFSA figure, and usually your family is expected to pay more. Also, many schools that say they meet 100% of need do not do so for certain categories of students, and transfer students, international students, and sometimes students who do not file for financial aid their first year at the school.</p>

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<p>If your dad earns that much in income from a regular job, the amount on line 7 is about $75,000, correct? And mom earns $8000 from her own business. That’s $83,000 in earned income. To get an AGI of $15,000 your parents had to report losses of almost $70,000 against the income. Some of that is probably write offs for your mom’s business expenses, but that doesn’t account for much. The majority of that must be from the properties. The fact that your parents can write off income with losses associated with the properties does not negate the fact that your parents earned the income they earned … and on top of that, they have assets. I understand your position, and I don’t doubt that things are really rough for your family, but the aid administrator has strict policies to follow. S/he is not going to take consumer choice into account.</p>

<p>The only suggestion I can make that might help is to gather information that might prove that the properties are worth less than what is owed on them. If the value of a property can be proven to be less than the mortgage owed on it, the aid office “might” be persuaded to remove that from the formula (I am guessing they assigned values to the properties). They may not, but it is worth trying. Other than that, I don’t know what you can tell them that will change things.</p>

<p>With two in school & earned income of $83,000 your aid would be quite a bit higher if you didn’t have the assets. You may not be able to persuade Emory that the properties are worthless, but if you can provide concrete proof it would be worth a discussion with the aid office.</p>

<p>Of course, if your primary residence is worth a bunch, that will still be taken into account. That may keep your aid down, depending on the worth of that asset.</p>

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<p>museumgerm -</p>

<p>If the money doesn’t sort itself out, you may need to ask Emory to defer your enrollment for a year. That will give you and your family time to figure out what to do. Perhaps it is worth it to your parents to allow one or two of the properties to be foreclosed on, or to try to negotiate short sales through the banks that hold the mortgages. Times are hard, and while it is small comfort to know it, it is true that your family isn’t the only one in this situation. Their lenders may be ready to negotiate.</p>

<p>Wishing you all the best!</p>

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<p>I don’t see how any of the parent assets are entering into the equation here if their net value is negative. Even in the most severe case, where a college figures that real estate investments can be sold to finance college expenses, no college would neglect to take into account the fact that the value of the real estate investment is less than the debt on that investment. How are the family assets adding anything at all to the financial need equation, other than possibly having that year’s losses added back in to the total AGI number?</p>

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<p>That was why I suggested gathering proof that the properties are worthless. Some Profile schools will assign a value to properties, and it is up to the family to prove it if the value is less than what the school assumes it to be. I don’t know if Emory does this, but they may … while I have never worked in a place that assumes values, I know that it is done. That is the only thing I can think of, other than the fact that maybe the parents DID assign value to the assets in the first place when they completed the FAFSA. I am not completely sure of this situation, as the OP’s description is a bit confusing.</p>

<p>I can see the losses being added back, but I agree that a negative value shouldn’t impact anything. I am wondering, though, if ALL of the properties are underwater. If not, the value of the primary home and/or the individual properties that are not underwater is not going to offset the value of those properties that are underwater.</p>

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<p>I think the important message here is that tax forms can have little to do with a college looking at income and assets. I hope the OP can defer or sort out the issues but the college may take the position that there is a asset value to the properties independent of what the family “owes” from purchasing them and it sounds like there is a small business involved and the parents were probably running as many expenses as possible against the business to enhance their tax position which resulted in a low federal EFC. I really hate reading posts like this because they crop up now and again with kids and the colleges that utilize Profile. We rarely hear back from kids who appeal a bad cash flow situation. Perhaps this OP will catch some luck in that regard. I agree with Kelsmom and all you can do is try to appeal. Worse case scenario you bail on a Profile school and stick with the FAFSA schools.</p>

<p>Off the cuff if the earned income were $80,000 rule of thumb around these forums is a resulting expected family payment of $20,000+ and many have pointed this out so I’m wondering how the OP came up with a federal EFC of $108 and how can the OP argue that point other than someone mentioned there might be a sister also in college so the EFC would be split.</p>

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<p>The reason the federal EFC is low is because the FAFSA EFC is based on AGI, which in this case is $15,000 due to write offs. The family does not qualify for auto 0 EFC formula, but there are two in school. This is how the EFC ended up so low. I imagine the when the question was asked regarding “Do you have more than $x assets,” the family answered no. It is also possible that the FAFSA EFC was adjusted by the school after the initial filing, since it is possible the info provided on the FAFSA was not actually correct when compared to the tax returns. This often happens, and it is not intentional … people just don’t follow the directions regarding which line on the tax return to use.</p>

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<p>An $80K AGI with assets under the parental allowance results in a $10K EFC for 1 child in college, or $5K for 2 children in college.</p>

<p>I can see a $108 EFC on a $15K AGI and $75,000 in earned income. Here’s a rough calculation assuming minimal assets (I might have the allowances off for 2011, would need to confirm this). The EFC comes out negative, which obviously wouldn’t happen in real life.</p>

<p>A. Age of older parent 50
B. Number in family 4
C. Number of children in college 2
D. Parent income (AGI on 1040) $15,000
– parent income from work $75,000
E. Parent assets $48,800</p>

<p>Parent FICA $5,738
Assumed federal tax %: 0.10
Parent federal income tax $7,500
Assumed state income tax %: 0.08
state income tax $6,000
Parent income protection allowance (table A3) $22,190
Employment expense allowance $3,500</p>

<ol>
<li><p>Total allowances $44,928</p></li>
<li><p>Available income $0</p></li>
</ol>

<p>Asset protection allowance (A5) $48,800
3. Discretionary net worth $0
Asset conversion rate 12%
4. Parent contribution from assets 0</p>

<p>Adjusted available income $0
Contribution from AAI ( $7,926 + 47% of AAI over $29,300) ($5,845)</p>

<ol>
<li> Parent contribution ($5,845)</li>
</ol>

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<p>IIRC the Profile form asks what year the properties were purchased and for how much, and so I could easily see schools computing a value that differs from the “current market value” that you might enter on the form. So definitely if you can get a local realtor to do a market analysis and give you in writing, a value that the properties could sell for today, that could help with that. </p>

<p>Just as an aside, if your parents really don’t want to arrange a short sale or allow the properties to be foreclosed, perhaps they should reduce the rent to the point where someone <em>does</em> want to rent them. Even if it doesn’t cover their full costs, it would be better than nothing, which is what they have now, and may help hold off the day when foreclosure becomes inevitable.</p>