<p>I heard from a teacher at my school that the "first asset" doesn't count when it comes to EFC. Therefore, before his son became college-age, he tried to pay off all of the mortgage on his house (because he said the money put into the house wouldn't be counted as his assets on the forms). This sounds confusing, and I don't really understand. Was he right? Could someone please explain to me about the "first asset"?</p>
<p>Some schools do not count home equity as an available asset. These are generally state schools who use the FAFSA only when determining financial need. If you want to attend a FAFSA only school, then it can be to your parent's advantage to use money to pay the mortgage off rather than place assets elsewhere. Keep in mind that a number of factors are looked at when calculating your need including income and assets of both parents and student.</p>
<p>Some schools use an institutional methodology in order to compute the financial need of a student. These schools usually require the Profile or another financial aid form in addition to the FAFSA. Most private schools, including the ivies and other top schools, use this method. Home equity is taken into account in this methodology and parents are expected to use that home equity towards college costs, either through borrowing against it or selling the home.</p>
<br>
<blockquote> <p>I heard from a teacher at my school that the "first asset" doesn't count when it comes to EFC.>></p> </blockquote>
<br>
<p>Interesting concept...totally untrue. This is simply erroneous information. Now...schools that use the FAFSA only do not use home equity in the equation...and they also do not use non-custodial parent/stepparent income and assets (if your parents are divorced/remarried). But home equity WILL count as an asset for schools that use it regardless of whether it's your first, second, third, fourth or whatever number asset. Where do people get these ideas???</p>