My parents bought their first house two weeks ago and we are moving from a rented apartment in a a month or two. Rent was just becoming too high and they wanted their own house so that my dad and I have somewhere to live should anything happen to my mom (who is the only one working) now that they’re getting older. She put down a down payment and intend to purchase it in full thereafter. My EFC is 0 (my mom can contribute a bit more than this annually but it’s still a stretch and if the house decreases the aid given, I may not be able to afford college) and my university uses the CSS Profile in addition to FAFSA.
It depends. While the FAFSA does not take home equity of your primary home into consideration, the CSS profile does. IF your mother pay for the house in full, then the full amount of equity in your home can hurt you at some schools. Even if she did not pay for the house in full, if she has the money to pay for it, she must report that money on both the FAFSA and the CSS profile
Where did the money come from for the downpayment if your EFC is zero?
How will she pay for the house in full when she earns so little that your EFC is zero?
She has her income from work plus some benefits.
We don’t live lavishly by any means and she’s been saving for a long time. There is enough in her account to pay in full right this moment.
What is the price for the house?
$450,000 more or less.
I think we’re missing a lot of details here. How was your EFC 0 if she had 450,000 to pay for a home?
Admittedly I don’t know all the specifics of her financial situation because she doesn’t like to discuss it too much in depth with me or my dad.
OK, but you at least know how the EFC is calculated, right? It is calculated based on income and savings and other assets. It doesn’t seem likely you could be 0 EFC. Who calculated that?
I am not sure how this will be treated. If she has 450,000 in savings that will be considered as partly available for school costs. And if you have 450k in equity that also allows your family to take a loan for college costs. So probably having it is a house is to your benefit in the aid formula over having it in the bank. But I see that you can afford to go to college, you mother just chooses not to use her money for that purpose. So she wants the school to give your family money so that is like the school paying for your house, ha. Schools consider the family is primarily responsible for the education of their children.
Why don’t you pick a school and see what the cost to you by running the Net Price calculator. If your mother wants to keep you stupid about how the finances work, then ask her to do it. And you need to ask her how much she can and will contribute to your college costs each year so you know what you have to work with when you search for colleges to apply to.
Are your parents married and you all live together?
I’m trying to wrap my mind around someone with an EFC of 0 paying for a 450k house in cash. If you have some more details you would get a better answer I think. I don’t think buying a house changes much, I bought a house while me and my wife were full time students and we received the same amount of aid the year prior and after purchasing if that helps.
The EFC could be low or 0 (depending on each college) if the house was bought before college application. But the issue here is whether your parents reported the $450,000 cash asset on your CSS profile or FAFSA earlier? It is considered a fraud if the money was not reported.
Are your parents self employed? What does your mom do for a living? What was your family income last year?
It doesn’t matter if the money is in the bank or in a savings acct…your CSS schools will count it the same.
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am not sure how this will be treated. If she has 450,000 in savings that will be considered as partly available for school costs.
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Something isn’t right. Unless the family income is so low that assets weren’t counted, then the mom didn’t mention all that savings when FAFSA was filed.
If CSS was filed, and they still got an “EFC” of 0 from the school, then the mom likely didn’t mention the $450k.
Something is fishy.
Does mom own a business?
Are you a high school senior who will going to college in the fall?
Something isn’t right. If your parents had $450,000 in a savings account, that would have needed to be included ON the FAFSA and Profile. For FAFSA purposes, you might have qualified for auto $0 or simplified needs test. That would not have allied to Profile. Did you include the money in savings on your Profile?
Did your family qualify for an auto $0 EFC or simplified needs test whereby assets were not counted?
If so, it is very possible that at least a portion of the equity in that house will count in your financial aid equation. In addition, you may not qualify for auto $0 or simplified needs depending on the criteria used for qualifying.
It depends on the school since it uses the Profile. It is possible to have a FAFSA EFC of zero and have zero need (therefore full pay) at Profile schools. An FAFSA EFC means nothing (except for federal aid) at a Profile school.
^^
The parents have no equity (yet), and unless they have a business or some else that only CSS counts, the low income family should not have much difference in FAFSA EFC and CSS Profile parent contribution.
The OP did not say they payed for the house outright. She said the mom had enough money in the bank to pay outright.
If this student qualified for auto $0 EFC or simplified needs test, the family assets (that savings) would not be counted for fafsa purposes.
But there is no simplified needs test or auto $0 for Profile schools. If the OP had $450,000 in the bank, that would have needed to be listed on the Profile. Hoping they were honest in completing the forms.
I can’t imagine that you would be able to save that much money and also pay rent and have income low enough to qualify for simplified needs test. Why not buy a house for $250,000 instead and use the rest of money for your college education?
Mommdc…there are many circumstances where a family could have this kind of money in a savings. It could be any number of things…maybe the parents were well salaried at one point and saved. Maybe they inherited money from someone. Maybe there were just plain thrifty and every penny of discretionary money was put into savings (instead of retirement, for example).
Perhaps the OP can clarify…how much did the family pay outright for this house? Is there still money left in the savings? Did they qualify for simplified needs or auto $0?
The OP wants to know if buying a house could make a difference in the need based aid…and the answer is…maybe. It depends on the need based policies of the college.