Even with the simplification of the FAFSA and the constant small improvements of the CSS Profile, there are still times when a family can be unsure of how to answer certain questions on either form. One group of individuals who have questions every financial aid season are business owners. Below, we’ve provided a quick guide to help business owners complete each financial aid application.
FAFSA
Most business owners have business income that appears on their personal tax return. That business income is therefore reported on the FAFSA, because each FAFSA filer’s tax return is automatically pulled into the application, and most income on the tax return (including business income) is factored into the financial aid calculation.
The FAFSA will also ask about the net value of businesses. When reporting business net value, start with the estimated value of the business and subtract any debts owed against it. When calculating the business value, include any real estate, machinery, and land owned by the business. If the business is a farm, also include any unharvested crops. For any negative number, report zero.
Important to note: If the family owns and controls the business (more than 50%) AND the business has 100 or less employees, then the net value of the business does NOT need to be included on the FAFSA. Families can also exclude:
- The value of family farms on which they reside or the value of any crops grown for the student and family
- Any commercial fishing business owned and controlled (more than 50%) by the family
CSS Profile
The CSS Profile, which is administered by College Board and required by about 200 colleges and universities, asks more questions about businesses and farms in comparison to the FAFSA. Families will need to report income and assets (net value) of all businesses and farms owned. Families that own more than one business or farm may be asked to complete a supplemental form called the Business/Farm Supplement. The school will provide that form when required.
If you have questions as you complete the financial aid applications, we invite you to visit our Resource Center, which has numerous articles, videos, podcast episodes, and webinars about the financial aid process. You can also reach out to us via email at [email protected] or via phone at (800) 449-MEFA (6332). Our hours are Monday through Friday, 9:00 a.m. to 5:00 p.m. Finally, you can request a virtual 1-on-1 appointment with a MEFA college planning expert here.
