Filling Out the FAFSA (from login to submit) - Part 2

Why This Matters

For some families, a small business or family farm is their main source of income. The FAFSA looks at those assets to estimate how much your family can contribute to college costs. But the rules have changed recently — and they really matter if your parents are self-employed, run a local shop, or own farmland.

• Before 2024–25: Small businesses and family farms were excluded — you didn’t have to list their value on the FAFSA.

• Now (2024–25 and 2025–26 FAFSAs): You must include their net worth (the value of the business or farm minus any debts tied to it).

• Coming Soon (2026–27 FAFSA, opening October 2025): Congress decided to bring back the exclusion rule, so families may no longer have to report those values again.

Think of it like a light switch:
🟢 Off before 2024–25 (excluded) → 🔴 On for 2024–25 & 2025–26 (included) → 🟢 Off again starting 2026–27 (excluded again).

When the FAFSA asks about assets, it’s looking for what the business or farm is worth right now if it were sold — minus what you owe on it.

For example:

• Your parents own a small landscaping business worth about $60,000, but they still owe $20,000 on equipment loans.

• You’d list $40,000 as the net worth.

That number becomes part of your family’s “financial picture.” More assets = less need = possibly less aid.

Include:

• Land, buildings, and equipment used for the business or farm

• Inventory and machinery

• Cash and investments tied to the business

• Value of livestock or crops (if a farm)

Don’t include:

• Your family’s home (even if it’s on the farm)

• Personal vehicles or tools used outside the business

• Retirement savings or 401(k)s

• Debts not connected to the business/farm

If a parent files a Schedule C for self-employment, they’ll need to list the net worth of their business (value minus debts).

• Keep tax forms handy — they help estimate value accurately.

• Don’t just guess or skip it; inaccurate answers can cause delays later.

• Family Farm: If you live and work on your family’s farm, the value of the home itself is not counted — only the farm business portion (land, equipment, livestock).

• Small Business: Even if your business has fewer than 100 employees, for these two years (2024–25, 2025–26) you’ll still report it.

• Future FAFSAs: Starting with the FAFSA that opens in October 2025 (for the 2026–27 school year), the rule flips again — small businesses and family farms may be excluded.

Think of it like this:

• In the past (pre-2024-25), if you had a family-owned farm or your parents ran a small business, the FAFSA might have ignored that value for a while — like it never had to report it.

• Now, for two years (2024-25 & 2025-26), the FAFSA says: “Yes, you must tell us the value of that business/farm.”

• Then soon (starting 2026-27) it may go back to a rule like: “Okay, we’ll exclude it again (or exclude it partially) if you qualify under the “family farm/small business” rule.”

• If your parents own a business or farm: make sure you gather fair market value minus secured debts (i.e., value of land/buildings/machinery minus loans secured by them). (Source: Center for Agricultural Law and Taxation+1)

• Know that “small business” for this purpose doesn’t just mean a tiny company. Under the new rules the size threshold changed. (Source:‍ ‍Financial Aid UCSB+1)

• Keep an eye on updates/legislation: because the exemption restoration for 2026-27 depends on Congress and regulatory implementation. (Source: Congress.gov+1)

• For current FAFSA years (2024-25, 2025-26) if you don’t report properly or misjudge the value, you may end up with less aid or need to correct your application.

• For planning: If a business/farm is large or growing, talking with a financial aid advisor might help understand how it affects your aid and whether you should sit down with documents early.