The net worth of family farms and small businesses will be considered assets in the Free Application for Federal Student Aid (FAFSA) starting in the 2024-25 school year. This will decrease financial aid eligible for families with small farms and businesses.
Previously, family farms and small businesses were exempt from the FAFSA formula. The change comes through the FAFSA Simplification Act — described on Federal Student Aid’s website as a “significant overhaul of the processes and systems used to award federal student aid.”
Michelle Kleeman, a mother of a sophomore in high school, will now have to rethink how much money she can spend on her child’s education, she said.
Kleeman, a member of the State Advisory Committee for MU Extension, owns the Kleeman Family Farm in Lockwood, where she raises cattle. She said a common misconception is that more assets means farmers have more money. But unlike typical assets like cash and liquid investments, Kleeman said, a farm’s assets includes physical investments like tractors and cattle. These physical assets cannot be quickly cashed in — without cattle, Kleeman has nothing to grow her business.
“The money you make, you put back into the business. So yes, you have assets, but if you sell those assets off, you have no business,” Kleeman said. “So, it just doesn’t make a lot of sense.”
According to the Missouri Department of Agriculture, the state has nearly 100,000 farms, and nearly 90% of Missouri’s farms are family-owned.
Kleeman said the input costs of running a farm include buying vehicles, seeds and fertilizer — making profit much lower than how it appears.
“A lot of people just get paid once, maybe twice a year on their farm. So that is something that a lot of people don’t really think about,” Kleeman said. “If I sell cattle twice a year, that’s the only time I’m getting paid — yet, money is going out constantly. So, it’s hard for farmers and small business owners to (have) cash flow to be able to support their children.”
Jeremy Neely received his bachelor’s, master’s and Ph.D. at MU and is now a professor at Missouri State University. He said he worries about this change reducing the number of rural students who are able to access higher education.
“I think this change is going to force some farm families to make the difficult choice between their children going to college, being able to afford college... or selling some things off... whether it’s part of the land or the machinery, like a tractor or combine,” Neely said. “Those are inputs that are vital to the economic success of that farm operation. And so, I think it’s a really complicated choice that people will now have to make.”
As a professor, Neely said he also worries the change might eventually decrease the diversity of students in his class.
Source: columbiamissourian.com
Photo Credit: GettyImages-Poike
Categories: Missouri, Business, Education, Livestock