<p>We are trying to get an idea of what our EFC will be and looking at the FAFSA for kids college coming up... my husband is a partner in a design firm that has been hit HARD by the recession and hasnt had any income in over a year, but is still working with no income (all income of the firm goes to paying rent, employees salaries, etc) and so has no unemployment compensation either. Just trying to keep the doors of the firm open, hoping the company can somehow survive the recession. Hanging on for dear life.</p>
<p>We're wondering if he will be considered a dislocated worker or how this will all play out on the FAFSA. Any advice or information for us?</p>
<p>Technically, no, he does not qualify. The language stipulates that if one was self-employed he qualifies if he is no longer employed … so if the business is still operating, your H is employed.</p>
<p>Remember, the only thing being a displaced worker affects is whether or not the assets are ignored … and only if the AGI is less than $50,000. The family can also qualify if anyone in the family received federal means-tested benefits within the past 24 months (so if you qualify for free/reduced lunch, get those kids enrolled!) - same income threshold requirement.</p>
<p>You say that he hasn’t had any income all year, so that will be reflected on the FAFSA, anyway.</p>
<p>No, but if you stick to FAFSA only schools you can at least show a very low AGI and the business itself won’t be counted as an asset. Profile schools are where it would hurt with having a business losing money valued and deductions added back to your AGI. My sister was in this position last year. A nightmare.</p>
<p>it just seems like we’re getting bad news in every direction… no income, no unemployment comp, and now it looks like any assets left are up for grabs even though our income is nil. so what you’re saying is that if he’s not dislocated, then the assets are considered available even if there’s no income, right? we can not file a 1040ez or 1040A.</p>
<p>That’s correct. But do remember that if the business has fewer than 100 employees, no business assets are reported. There is an asset protection allowance for the parents, so you can have a decent amount of assets before they actually come into play in the EFC formula. You can access the 11-12 formula from this link: [IFAP</a> - EFC Formula Guide](<a href=“http://www.ifap.ed.gov/efcformulaguide/101310EFCFormulaGuide1112.html]IFAP”>http://www.ifap.ed.gov/efcformulaguide/101310EFCFormulaGuide1112.html). Scroll down to find the asset protection table for dependent student EFC.</p>
<p>If you DD gets accepted by a very top Profile school, think Harvard, Yale, Princeton, Stanford, they will probably work with you. The rest I recommend avoiding.</p>
<p>The key asset that’s included at Profile schools is your primary home which FAFSA does not count. Next, for the self employed, they will value your business and it’s assets and want their 5.6 percent of that. They will add back in many of the business the IRS allows. They look for every last cent.</p>
<p>Look at it this way, many of the wealthiest people have no income from work. They expect the self employed to be hiding income which is why they reconstruct your AGI.</p>
<p>If you don’t have assets it leaves you in a better situation re colleges. My sister and bil own a business that’s just hanging on. They have some home equity but not much else. Their DS applied to several Profile schools and was accepted at all including some ivies considered generous aid schools.</p>
<p>They appealed their FA package at each and got nowhere. The colleges gave considerable value to the money losing enterprise. Their approach, while friendly enough, was there was plenty of money to pay because they could borrow (Plus loans) against all that business and home equity they had. After they added back in almost everything the IRS allows, their income didn’t look half bad which was just crazy because it included things that while those not self employed do not enjoy, they were anything but money in their pocket.</p>
<p>Their DS, however, is happy in the honors program at state flagship.</p>
<p>Reread the qualifications for the simplified EFC formula in the EFC Formula Guide and pay attention to the use of the word “or”. It is not necessary to file a 1040A or EZ if you can qualify for a federal means-tested program such as reduced school lunches…which is why kelsmom suggested enrolling your kid(s) even if they don’t eat the school’s lunch. The “lookback” period is good for 2 years, which would give you a bit of breathing room for 11/12 FAFSA if your H’s income doesn’t increase.</p>
<p>I’m guessing if their kids were getting free lunch, the husband would turn off the lights, collect unemployment and look for work.</p>
<p>I’m seeing a lot of upper middle families in this situation. Most had many good years and they have significant home equity and investments, but they’re drawing them down in these slow times for many businesses. Their kids have grown up in worlds where attending a private college was the norm and the parents long expected to be able to send them to one.</p>
<p>It’s a new world out there. If things get back to normal in a year or two these families don’t want to regret the college choice. This is very difficult, but the escalating popularity of state schools speaks to what most are doing.</p>
<p>My heart goes out to the OP and her family.</p>
<p>My guess is they have never considered applying for the school lunch program…why would they? But with no income (and do principals even qualify for unemployment?), they are probably living off their savings. Her concern is how to minimize their EFC during this dreadful period, and probably to conserve assets, so applying for that program would incease the probability that assets wouldn’t be considered, at least for FAFSA. Of all the “federal means-tested” programs, reduced school lunch is probably the simplest to apply for and I believe it only requires income, not asset, info.</p>