<p>I have two teens, one ready for college, the other entering high school. Family has a joint family income just under 60K. Where we live, in a town with one of the highest housing costs in the nation, that's not much to live on. We're a frugal family whose only debt is a mortgage and a car loan. We own our (modest) home, with about 300K equity, but still have a long way to go on a $2000/mo mortgage. Since I'm self-employed, and earning only $30K a year, I doubt we could qualify for a loan, even on our equity. In fact we tried to last year, and were turned down. And even if we did, we don't earn enough to pay another loan on top of our mortgage. We really can't afford to borrow for college....we're too close to retirement. (My partner is 64).</p>
<p>How do schools handle home equity? Does it vary depending on where you live and what normal real estate costs are? A $600,000 dollar house here is a fixer-upper shack...while it might be an estate somewhere else. </p>
<p>My son wants to apply to a lot of schools that use the Profile and not just FAFSA...how can we find out how home equity figures into financial aid awards?</p>
<p>I'd love any discussion on related topics. I'll be watching the thread!</p>
<p>This is our situation as well. Our income is in that range and we live on eastern Long Island. My husband (my kids stepfather) bought this house in 1978 and it has been paid for in full. So we have 100% equity in a house that at the peak of the market 2 years ago was worth half a million dollars - a 1600 sq foot ranch on 1/3 of an acre. Now it is worth less.</p>
<p>I have four children. My eldest went to Colgate and graduated last year. It uses the CSS profile. We listed our house as being worth the value Southampton town assessed it at, which was lower than the likely market rate. Her financial aid package still met 100% need based on the FAFSA. </p>
<p>FAFSA, as you probably know, does not ask for primary home value so for any FAFSA only schools it will have no affect. From what I have read on CC, CSSprofile schools will each vary as to how they use the house equity information. Some apparently cap the value to some multiple of income. Others do not. I am not sure if a school would share that information but it is always worth asking. The best thing appears to be to make sure your have a broad choice of schools (including some FAFSA only ones as financial safeties and ones where the student may be eligible for merit aid) to ensure you have an affordable option when it comes to signing on the dotted line.</p>
<p>methinks the colleges that do cap home equity are the most selective such as Yale (2.4 times income), and Stanford (1.2 times income). I believe that there several other other highly selective schools that also cap income.</p>
<p>Either Harvard or Stanford no longer counts it with their new aid initiative, can’t remember which. But I agree with blue above, other than the really generous colleges, most will just see it as another asset. They won’t care if it’s a mansion or a tear downer. </p>
<p>Really surprised that Colgate met the FAFSA EFC–never heard of a private school doing that --was your child an athlete they really wanted or something similar?</p>
<p>I wish I could give you more specific information but I agree with the other posters, at some of the more selective private schools your home equity might not count against you to a great extent. That you are close to retirement will factor in your favor. Have your son go ahead and apply to the selective schools that he wants to go to. Tell him not to get his heart set on any one of them in particular because you need a good financial aid package and they vary greatly between schools.</p>
<p>so far my son is looking at Reed, Dartmouth, Carnegie-Mellon, Stanford, Swarthmore, MIT. He’s an excellent student, but is just starting his ACTs and SATs (he’s a junior). These are all very competitive schools, I know, and he needs to have some 2nd-3rd tier schools for safety, both academically and financially. </p>
<p>But he’s just starting. He’d like a school with good core liberal arts with very strong math/science/computer departments. He wants academic rigor. He’s used to a small school and I’m not sure he’d do well with huge lecture halls. An intense learning community–that’s for him. He’s just starting to look…and we’re open to suggestions. He’s open to going to another part of the country, but doesn’t like hot climates.</p>
<p>I’m hesitant about the UCs right now because of all the cuts that are going on in California. Things are getting worse, tuition is going up rapidly, class sizes are growing and classes are getting harder to get. I’m not sure public education in California is as good an option as it used to be.</p>
<p>Of the schools that you listed Reed would be the easiest to get into. Unfortunately it has a reputation for not being as generous with financial aid as other schools.</p>
<p>Coming from CA, if he’s white or Asian, he’d have to have some very impressive stats and ECs for most of the schools on the current list. And none of them are among those that ignore home equity, so expect you’ll be paying 5.6% of that equity every year. This is why so many top CA students end up at Cal and UCLA despite the financial mess–they are much easier to get into than the ivies/MIT.</p>
<p>I don’t know much about Reed’s aid, but CMU is not a great choice for the low income needing aid unless their stats are off the charts.</p>
<p>I think that a number of the most selective schools cap home equity. Williams uses a cap of 1.2 times salary. MIT doesn’t count home equity if your income is less than $100k. Princeton doesn’t count it if your income is less than $90k. Swarthmore uses the 1.2 multiplier.</p>
<p>Colgate met the entire need for my daughter. She is not an athlete. She was, of course, very bright and had good scores - otherwise she would not have been admitted to Colgate. The package included the subsidized Direct Loans, work study, and TAP. The university filled the gap with a “Colgate Grant.” Her EFC ran between $3000 her first year (I was a single parent at the time and she was the eldest of four children) to $7000 her last year.</p>
<p>Full-time freshman enrollment: 738
Number who applied for need-based aid: 289
Number who were judged to have need: 235
Number who were offered aid: 235
Number who had full need met: 235
Average percent of need met: 100%
Average financial aid package: $36,389
Average need-based loan: $1,769
Average need-based scholarship or grant award: $32,574
Average non-need based aid: Not reported
Average indebtedness at graduation: $20,164</p>
<p>Colgate is need aware and only admits a limited number of students who require financial aid.</p>
<p>Reed meets 100% of need, and caps home equity, but remember that all of these private schools determine the “need” using their own formulas, and they typically meet need through a combination of grants, scholarships, and loans. Our experience with Reed’s financial aid was that although they met 100% of need, when you consider their high sticker price and the way they calculate need, they ended up being more expensive than some FAFSA privates that met only around 85% of need.</p>
<p>So for anyone who has modest income, but is house-rich, consider some of the private FAFSA-only schools that have a good track record of providing need-based aid. They generally won’t have the big names like many in your list, but there are some very good school that meet that criteria.</p>
<p>A year ago, when we were narrowing our daughter’s school list, the treatment of home equity was a consideration, so I called each college’s financial aid office. Most were willing to tell me how they treated home equity in their formula, although often I had to get transferred to someone who knew what I was asking about. It’s confusing, because there really are a number of treatments. Some cap equity at a multiplier of AGI. Some instead cap home value at a multiplier of AGI, and then subtract mortgage debt to get equity (a treatment that can sometimes leave you with no calculated home equity, which is a good thing).</p>
<p>Anyway, our daughter applied to both in-state publics, FAFSA-only privates, and Profile privates. Bottom line price, in our case, for a couple of the FAFSA-only privates was comparable to the bottom-line price for the in-state publics.</p>
<p>There’s a thread here on the subject, as I recall.</p>
<p>If you are concerned about income don’t forget that it costs more to have a kiddo in college across the country. Been There Done that from a Californian here.
The UCS and the CSUs won’t show you a ton of money but at least the cost is not as huge as the privates. The privates may show merit money. Both of my kids are at private schools one in CA one in Boston. Both get enough in merit money to make the COA the same as a UC. Of course, that means we are still paying 25K per kid out of pocket per year. Then you have to add the cost of travel for the Boston kid.
I should add both are at FAFSA only privates which did not consider home equity. We have a lot of home equity but we also have a higher income so did not qualify for need based aid. You will definitely qualify for some need based aid.
The problem is that some of that aid will come in the form of loans. You have to sit down with your child NOW and think about how much you think is reasonable to borrow. If you are denied loans he will be eligible for more in loans under his own name.<br>
There are online calculators which will show you what the monthly payments would be on varying amounts of loans.</p>