College costs are staggering yet many families are turned away from receiving free financial aid because their income is deemed too high or their home equity is considered too great. She said the expected family contribution was calculated by the Office of Federal Student Aid. If a family is considered to have too much income or too many assets, which he said was a subjective measure that varied, then receiving aid is unlikely.
Micah Fraim, a certified public accountant and personal business advisor , said that financial aid calculations take assets into consideration, including illiquid assets like home equity. Financial aid can be distributed as free aid or in the form of student loans, work-study funds or parent loans. Reecy Aresty, a college admissions and financial aid expert and author, cited loopholes that benefit small business owners.
For example, she said that a small business with fewer than employees will not be assessed on business assets. She also cited special rules for families classified as separated for financial aid purposes; typically the student lives with the less affluent parent at another address.
Fraim said that parents of children who may benefit from a trust later in life are likely to receive less or no financial aid, which encourages parent not to disclose such information on applications.
Even students who deem themselves financially independent of their parents can suffer under the rules for financial aid distribution. The Office of National Drug Control Policy states that a student convicted of a drug-related felony or misdemeanor while receiving federal student aid will be ineligible to receive aid for a specified period upon conviction. This period can be reduced by completing an approved drug rehabilitation program and undergoing two unannounced drug tests successfully or by having the conviction expunged or otherwise removed.
