<p>Please help me sort this out.
We have a second home/condo that could probably sell now for $170,000. Still owe about $70,000 on it. How does it affect financial aide - is it seen as $100,000 I have to be used for education? Same as if I had this amount in 529 plan?</p>
<p>What about savings in 401K? </p>
<p>I understand that FAFSA schools do not look at the equity in primary residence. How about Profile schools? If I have $100,000 equity is it counted at face value?</p>
<p>I also understand that income is more important than equity, but that later part is really confusing to me.</p>
<p>The $100,000 from the 2nd home is a reportable asset and is regarded as available for the EFC. Only a % goes to the FAFSA EFC (up to 5.6%). CSS will have their own methodology.</p>
<p>The 401k is not a reportable asset for FAFSA. </p>
<p>Primary home equity is not reportable for FAFSA. CSS schools have their own way of treating primary home equity. Some may disregard it, others may cap it at a certain % of income, others may do something else.</p>
<p>Thanks swimcatsmom - I know your are an expert here 
CSS= Profile?
On what does the percentage depend on? (the one you mention goes up to 5.6) And is it a percentage of the value or of income?
401 is not considered an asset but the before tax contribution is considered an income - correct?</p>
<p>Yes CSS=profile (about which I am fairly clueless).</p>
<p>Assets and income are 2 separate things. On FAFSA up to 47% of income over protected amounts can go to the EFC once it reaches certain (not very high) levels. But for assets it is a maximum of 5.6%.</p>
<p>Yes the current year pretax contribution to a 401k or IRA is added back to the AGI in the EFC formula and treated as available income.</p>
<p>Thanks!
Do you know what is the level of income above which 47% goes to EFC? I will not quote you on that, just general number. Is it $50, 000? $100,000?</p>
<p>From the 2008-2009 formula:</p>
<p>Contribution from AAI (32% of AAI < 26K, 47% of the amount > 26K)</p>
<p>AAI is adjusted available income, which contains two parts, net income and net assets. Net income is total income minus certain allowances for taxes and an income protection allowance. Net assets is 5.6% of assets net of an asset protection allowance which is based on the age of the older parent.</p>
<p>This is the parent contribution; for the student contribution there’s no asset protection allowance, and income protection allowance will be around 4500 for 2010.</p>
<p>It’s complicated as there are various asset and income protections based on number in family and in college for income, and number of parents and age of older parent for assets. There is a formula here
<a href=“http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf</a></p>
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<p>Make sure you use fair comparables and don’t shortchange yourself by failing to deduct for any costs that would be reasonable/necessary (repairs, commissions, closing costs, concesssions, etc.) for a quick sale!</p>
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<p>Table A6 of the link SCM provided shows the current scale for available income. It works out to about 27% up to AAI of $28,600 and 47% of AAI over $28,600. (For parents of dependent students).</p>