Financial Aid Bonanza For
Small Business Owners
by Reecy Aresty
College Admissions/Financial Aid Expert
and Author
College and
college-bound families should be looking into a unique opportunity to
save tens of thousands of dollars on college costs for school year
2008-2009.
There’s a gigantic
loophole in the 2008-2009 Free Application for Federal Student Aid,
(FAFSA). As a result, families who own and control a small business and
who are only required to complete the FAFSA, have a rare opportunity to
capitalize on a financial aid bonanza!
I direct your
attention to a provision in the Higher Education Reconciliation Act of
2005, which was signed into law by President Bush on Feb.
8, 2006, that states, “The net value of small businesses with not more
than 100 full-time equivalent employees is excluded from the definition
of 'assets'.”
Accordingly, small
business owners (parents, not students), or those who can legally set up
a small business under the federal guidelines, will reap huge rewards in
the form of untold thousands in financial aid previously unobtainable!
It is highly advisable
to set up a C or S Corporation, LLC, or at the very least, obtain an
Employer Identification Number (EIN) for a Schedule C business. In that
way, the small business will have its own individual tax status.
However, I recommend that a tax advisor be consulted before choosing any
particular corporate entity.
529
Plan owners can benefit as well
In the financial aid
formulas, students have no asset protection allowance, which means that
for every dollar a student has, they lose 20 cents per year in financial
aid. Parents fare far better and only lose 5.64% per year over their
allowance which increases with age. Now that both 529 Pre-paid Tuition
and 529 Savings Plans are considered parent assets. I recommend the
following:
For 529 Plan owners,
it’s a bit more complex. Those parents who own one can legally transfer
the entire account value into a similar plan owned by their small
business entity, but need to be aware of the downside. The transfer
could trigger a taxable event, but only on the gains in the 529 Savings
Plan. Once the transfer has taken place, if the beneficiary is ever
changed, it could also result in a taxable event. Nonetheless, the
strategy makes perfectly good sense, as the benefits far outweigh any
modest income tax consequences. Go for it!
About The Author:
Reecy Aresty has been a financial advisor since 1977, and
is founder and president of College Assistance, Inc., located in Boca
Raton, Florida. He is the author of the critically-acclaimed, How To Pay For College
Without Going Broke, an invaluable, parent/student
manual. Arguably the most revealing book ever
written on college admissions and financial aid, it is the only book of its
kind also available in Spanish.
Reecy has been
interviewed by financial experts on radio and television, and by many of
the nation's most respected publications including Money Magazine, US
News & World Report, Bloomberg News, Scripps Howard,
The Washington Post, financial icon Terry Savage for the
Chicago Sun-Times, Consumers Digest, The Education Times and AOL. An Internet search for
Reecy Aresty will result in thousands of links to sites all over the
world that feature his articles, advice and methods. Recently, he created
the College Information Network™,
which includes The High School Blog, The College Blog, PayLess For
College and The Way To College.
For almost three
decades, Reecy has helped thousands of families send their kids to the
college of their choice for less than they ever dreamed possible.
The critics agree. The way to college is Reecy Aresty's, How To Pay For
College Without Going Broke. It reveals the trade secrets and insider
information our colleges, universities and the federal government don't want you to know. For
further information on the best college funding book on the market today,
click here. For more information on admissions and
financial aid -
Ask Reecy!
Thanks for stopping by. If
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on this site, thank a teacher. If you're
reading this in English, thank a veteran. If you're reading this
without glasses, thank God. If you don't own a small business,
start one. And if you want to get into the college
of your choice for less than you ever dreamed
possible,
buy the book...
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