November 21, 2007

Financial aid for parents who own their own businesses

Posted in Legislation Affecting Students at 7:24 AM by Joe From Boston

A recent article by US News & World Report bashes what it calls a “little-noticed loophole written into federal college financial aid rules allows the children of wealthy entrepreneurs to collect aid intended for the needy”

Well, lets look at this issue from a historical perspective. For the past several years, people who owned their own businesses were at a disadvantage, particularly small business owners, because the business’ value was considered to be assets of the owner, even if those assets were tied up in the business e.g. rent, salaries, etc.

This caused small business owners in particular to be denied financial aid for their children, because the calculations determined that they had a whole lot more money at their fingertips than they actually did.

In the financial aid world and in Congress, this is NOT a little-known loophole, it’s something people have been trying to rectify for years. This was planned, on purpose.

Could it have been phrased or tailored better? Almost certainly. Will some rich people qualify? Yup.

But think of how many small business owners will finally be eligible for federal financial aid for their kids. We’ll see how this all shakes out, but I this “loophole” was planned with the best of intentions.


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