You've worked diligently for a long time to become responsible together with your bills making payments on your mortgage. As a result, no doubt you've built up some equity in your home. If you are especially fortunate, the real estate market in your town might have also put into your home's value.
Now you have equity in your home, however, is that going to hurt your quest for educational funding?
Discover the connection between home equity and college financial aid, and just what that you can do to maximise your college funding.
Home Equity Impacts College Aid on the CSS Profile
If your student chooses a college that only uses the FAFSA, home equity won't be area of the calculation. However, some schools use the CSS Profile, which asks you to estimate the current market value of your house.
It's entirely possible that a portion of your house equity will be put into your EFC, as if those funds were for you to use for college.
Unfortunately, each school that utilizes the CSS Profile treats home equity differently, so there's no easy way to know whether your equity will ruin your chances of aid in a particular college.
Some schools will ignore home equity even if they use CSS. Others will consider home equity as a major asset, and a large value can ruin your aid chances. Finally, another group uses home equity with a cap so that it is just a moderate hit.
You can find out which category your target schools are in by emailing the financial aid office, even though they may not be forthcoming.
What if Your House is Overvalued?
Knowing the exact market value of the rentals are difficult, and schools uses a number of tools to double-check your estimate. Unfortunately, that can overvalue your house significantly.
One parent in our Paying for College 101 Facebook group expressed this concern, saying, “The calculator just overestimated my home value by $130K, based on the Zillow estimate.”
Another person in the audience advised, “My suggestion would be to anticipate the school will use a Zillow or Redfin estimate if your reported value is gloomier compared to online values, and proactively write a reason why those figures are too high.”
You may also wait until the help package is received, and if the college under consideration is a top contender, request a reconsideration of the aid in line with the home equity numbers being incorrect.
Most of times Home Equity Does Not Impact Financial Aid
Remember that only about 240 schools nationwide use the CSS Profile. Although this includes many prestigious universities, it doesn't cover all the high-quality education available for your student.
Don't be afraid to steer from a CSS school for those who have significant home equity. You are able to maximize your chances of improving aid by focusing on FAFSA-only schools.
Find the Most Generous Schools Today!
As under consideration how to afford college, where you send your students constitutes a tremendous difference. Some schools are much more generous with aid than others. But exactly how do you know?
We've done a lot of the meet your needs. If you want more information on targeting affordable schools, take a look at our College Insights tool today!
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