Our daughter is finishing up her freshman year in college. Probably one of the most painful things I have experienced as a parent involved with a child going to college is the application process for financial aid. It is a complicated process obfuscated by poorly written questions and confusing tax terms. Last year, I probably lost 40-50 work hours trying to figure out the two main forms that needed to be filled out: FAFSA (for federal financial aid) and the CSS Profile aid application also used by many institutions. This year was a little easier because of what we learned last year, and I hope that next year will be even easier.
Complicating the whole process is that my wife Maria and I make our livings completely as musicians from a myriad of income sources. Our piecemeal professional life includes:
- My private piano and composition studio
- Maria’s private band instrument studio
- Maria’s part time teaching position at a local Montessori school.
- Gigs for Maria’s and my duo, Sticks and Tones
- Flagstaff Symphony Orchestra, of which Maria is principal percussion
We also have a number of minor sources of income:
- ASCAP Royalties from my compositions being performed
- Income from Music Flash Class, my note drilling app on the Apple AppStore (www.musicflashclass.com)
- Rental income for some percussion instruments Maria rents out to students
- Various other pickup gigs that Maria plays
Identifying how all of this fits into our financial aid packet is not easy. I am not convinced that we have it all correct (although I think we do!), so do not trust this blog as an accurate source of information. With that caveat, here are some tidbits of information that we have picked up to make this process easier:
- If possible, have your FAFSA application pull all of its income information directly from the IRS instead of typing it into the form yourself. For us, that meant filing electronically as soon as possible, and as soon as our very modest refund (yay!) hit our bank accounts, we knew that the form had been processed and was available for FAFSA to pull.
- Have a copy of your tax forms available for reference as you fill out your forms. Most of the income questions have help buttons that refer you to line numbers on your 1040.
- Use google to help answer questions. You are not the first one to be confused by this process!
- Save your forms often! It is possible to spend significant time on a single page before moving onto the next one. A lot can happen in that time — your laptop might run out of battery, your Internet might go down, you might be called for dinner … All of these have happened to us!
- Understand whose assets belong to whom and what you need to report: For instance, our 529 college savings plans are assets in the parents’ name, not the child’s. IRAs and 401Ks are not counted towards the assets you need to report. And then there is that line that requests the value of your family owned business. Did we need to report the value of our instruments? No, because we have fewer than 100 employees.
- Call the folks at FAFSA if you have questions. Our daughter had questions about her income. She teaches piano, takes music lessons, but does not file taxes because her income is low. Should she report a net income as gross income less what would normally be deducted (e.g., piano lessons for professional development)? She called up FAFSA to find out, and the gentleman was very gracious. She needed to report her gross income, not her net. This might be different if she were filing taxes.
There are a few other things we discovered along the way:
- It is the income from the previous year that determines financial aid for the coming year. I.e., it is our 2013 income that determines financial aid for the 2014-2015 academic year.
- IRA contributions do not lower the income considered in the formula used to calculate IRA deductions. The government figures that you could use that money to pay for college instead.
- If you file a Schedule C as a self employed individual, then it is the net of the Schedule C which is used for income calculations, not your gross income. This of course makes sense, but you might consider this when deciding when to make major business related purchases. I upgraded a spinet (2nd piano) in my studio to a nice used console, and that long needed purchase ended up lowering the income that we report to the IRS and financial aid purveyors.
- Along the same lines, keep close track of your income and expenses through the year so that you can plan when to make needed purchases. I received a small windfall from ASCAP from a symphonic work that was performed 5 times in 2012, and I am told by my daughter’s college that that extra income bumped us barely into a new bracket for financial aid. Maria has long been planning on purchasing some new rental instruments, and in retrospect it would have been better to purchase those in 2013 than in 2014 to keep us in that lower financial aid bracket.
- Encourage your child to apply for other scholarships. Our daughter supplemented her financial aid package with several thousand dollars from a handful of scholarships she found and received. It is these scholarships that have enabled her to have the money to continue taking music lessons, even though she is not majoring in music, while maintaining a modest savings account that gives her some financial flexibility during her college years.
We feel very blessed to be making a living as musicians, and we double count our blessing when we consider that, even with our very modest income, our daughter is able to attend a top notch school because of prior planning, financial aid, scholarships, and (of course) the hard work of our daughter.
Do you have any other tips from your experiences on sending a child to college on a musicians’ income?