Some Profile schools do ask about tangible personal property in supplemental, school-specific Profile questions.
One thing that helped us is that you can put the home value that you think you could sell it for today, and for us, that was much lower than what it’s actually valued at for property tax purposes.
Anything based on rich uncles and grandparents are only an if and when. The uncle may take up with a floozy, the grandparents may have huge medical bills and while the kid is invited to Nana’s club, Nana has no obligation to pay for his education, may just believe it is the parent’s problem or grandpa did fine as a bricklayer and look how well that turned out!
As for the divorces, that would only sidetrack.
I like @twoinanddone interpretation, of having a basic amount of home equity that can be protected and everything else should be up for grabs.
Yes, the article is nearly two years old, so it may no longer be completely accurate as far as how certain Profile schools treat primary home equity, but the main point is still valid: some Profile schools completely ignore home equity (this is nothing new), others cap it at an amount most usually related to a factor of income, and some will use 100% of home equity in the FA calculation. If you want to be sure what a specific school does today, you will probably need to contact the FA office and ask.
Well, too bad that’s an incorrect interpretation. Even if it was correct, there would still be at least one category of student who would be unfairly hurt by it: the student living on an inherited high-value homestead or family farm where the family has low income and assets (other than the real property equity, which may be difficult to access to pay for college).
Assessed value for property tax purposes should never be relied on as an indication of current market value.
@SeekingPam You may like it but according to the article it is wrong for schools that cap.
Notice the example in the article. When full equity is used the EFC is effected by an increase of 20k. But when the equity is capped at 2 times the income then the EFC only increases by 6k.
Family farms are a class by themselves and are treated that way. As for an inherited or long standing asset, that was my point with the person who buys a house the day before applying. One is a circumstance, the other is a choice.
@ClaremontMom yes I know it is not how it is interpreted, I was the one that linked the article which explains exactly what it means when a Profile School is capped. The only new thing in the artilcle that I learned was that there were such different levels of capping.
I just think that the other way (having some that was protected) makes so much more sense.
It’s all a matter of perspective I guess. For your earlier example of high equity and low income this would be more beneficial.
It would treat a certain amount of home equity as the asset that it is.
This is a good idea if your goal is to have a family heavily mortgage, and therefore put at risk, the place where they live. I think that the FA community has made a policy decision that this is not a good idea.
Again goes to when they bought it. If it was purchased in 1990 correct. If it was bought last week? That 1.5 could have paid tuition.
Every time some kid comes on here saying how his parents cannot afford UC whatever or Brown at full pay because he lives in Silicon Valley and his parents have a huge mortgage, there are at least 10 people that talk about how buying expensive houses is a choice and not one FA is designed to support!
@SeekingPam - I appreciate your desire to try to understand the system you are just entering. I was in the same place several years ago, and it can be maddening because the rules are so different at so many different schools.
One thing for sure, is that need based aid is better at more selective schools. But since it is hard to predict where your snowflake might get accepted, for families that want to compare offers, it is hard to know which schools to apply to. Even then, you may wonder which steps you might take before the close of the student’s junior year might be the most beneficial to you in the long run. Things like refinancing or taking some of your home equity and remodeling the kitchen or bathrooms, replace the minivan, may actually make sense to do earlier from both a standard of living perspective, as well as from a perspective of maximizing financial aid. But if the home improvements increase your home equity and property tax bill, and it also is not protected from FA formula, it may not be such a great idea after all.
For some of us, simple things like pre-paying a heating oil contract, prepaying a car payment, and paying off as many medical bills, etc. helps minimize current assets immediately prior to filing for FA. Even though having $5000 less in the checkbook may only mean $300 or so more in FA (and from what we saw, it means at least that, and in some schools over $1000), for a lot of us, that means a lot.
Part of it is we want to feel that we’ve done everything possible to put ourselves in the best position to maximize what we can get.
Despite all I asked before we began this process, I don’t think I truly understood the differences between schools FA policies until we had to first fill out the supplemental Profile questions that are school specific. My S will be graduating from Columbia next month, so when we began looking at schools years ago and tried to figure out affordability, not all of them even had working NPC tools. But we filled out the CSS Profile and noted that some schools listed some very peculiar questions.
What made me understand this was that some cared about how many vehicles you own, the dates of purchase and their purchase price, amounts owed, and current values. Some schools want to know that you’re not hiding away your money in a few collectible cars, like a DeLorean or Lamborghini. Other schools don’t ask about any vehicles in the family. So, depending on the schools you may want to apply to, it became clear to me that it is possible to hide assets from some of them. And somehow, it became clearer to me that the schools are fine with this.
Thank you @3puppies unfortunately, going to the prior prior year has closed that avenue for anyone who has a kid who is a junior. It does not matter,most of what happened junior year was completely beyond my control anyway and there is not much I would have changed even if I knew ahead of time.
I am surprised that schools seem to allow people to follow the letter rather than the spirit of the rules.
I do wonder if in a capped school or a no home equity school whether they ever said to someone, yes normally you would be eligible to get financial aid but your 10 million dollar “home” just makes that impossible. Has that ever happened?
Do yo really think that someone with $10 million in home equity should be receiving need based aid? Really?
If they re unemployed and have no income…perhaps they should think of selling the very highly valued house…instead of hoping for need based aid from some college.
I’m not sure I understand your point of view…at all.
THAT IS PRECISELY MY POINT! @thumper1
I was trying to find the most absurd example because it does not make sense to me.
@thumper1 I think @SeekingPam is actually advocating that they NOT get FA despite low income. She finds the capping unfair in the extreme case of low income but a recently acquired (eg inherited) very expensive house.
ETA: cross posted with seekingpam.
@ClaremontMom thank you, although in the case of the inheritance, it would be inherited money used to buy a house prior to applying for FA. I understand and can sympthize if it is the ancestral home that someone has been living in since they were a child.
Too bad you are sort of new around here. There have been several notable threads here on the past from folks claiming to have millions in assets but no income…and who therefore claimed to qualify for,the FAFSA si oilfield needs test.
One notable parent was mad because NYU didn’t give him a break on his assets. Remember…NYU is a Profile school, and not a particularly generous one.
I don’t have time to search for the thread…but it’s only one example.
If this is what you mean…
@thumper1 sort of. I think NYU cannot be used as an example of anything. I do not mean the simplified needs test but schools that on the Profile either do not ask or cap home equity at no more than 2,5 x income so a family earning 100k would be capped at 250,000 of home equity even if their house was worth 10M. Did a school ever say, yes we usually cap home equity but in your case it is ridiculous?