How much does home equity factor into financial aid packages (specifically at Vassar and other full-needs institutions?) I was playing around with home value on the NPC and the final cost changed by a few thousands dollars depending on what I put in. Additionally, I was wondering if the cost of the home at sale vs. the current value makes any difference to the financial aid process. My family bought my current home about 7 years ago at 200,000 less than it is currently worth.
Thank you!
I forgot to include this but I also wanted to know if cost of living was factored into financial aid. Would it make a difference if you were in a family making 100k in a cheap area of Missouri vs. 100k in an expensive part of New York?
sorry…posted twice! So deleted.
It’s your equity that the colleges use…so if your home has appreciated in value…that is what counts.
Primary home equity is only used by Profile schools. Some schools have a %age of income cap on primary home equity. Some count more equity up to 100% of it…and some schools don’t count primary home equity at all.
@thumper1 Is there any way to view what percentage of home equity is used by each school? And does the College Board NPC use 100% of home equity for every school regardless of their policies?
I believe the College Board NPC is unique to each school…assuming you are accessing it from the school website.
So no…it wouldn’t be 100% equity unless that is what the school uses.
You should go to each college website, and access their net price calculator. Some will send you to the college board for completion.
Go here, and click on the “Home Equity Spreadsheet” link:
http://www.thecollegesolution.com/will-your-home-equity-hurt-financial-aid-chances/
“Cost of living,” as that term is commonly used and understood, is generally not a factor when determining need-based financial aid.
Cost of living will not be factored in but state tax rates are factored in.
If you want to really dig into this, you’ll find last year’s formula here:
https://studentaid.ed.gov/sa/sites/default/files/2017-18-efc-formula.pdf
Page 17 has the table of state tax rates that are factored in as an allowance against parent income (line 9 at page 9). So basically, the New York family would get about double the reduction over the family in Missouri, to account for NY’s higher tax rate.
And home equity can be iffy because there are various ways to determine home equity. For purposes of filling out the CSS Profile, you want to use the most conservative approach possible, but you need to be aware that the college might use a different approach to determining equity. But when you talk about what your parents’ home is “currently worth” there is a difference between a formal appraisal and the number you might find on Zillow, which can be overly optimistic
You might want to play around with this calculator – https://www.fhfa.gov/DataTools/Tools/Pages/HPI-Calculator.aspx - it is based on the formula the FHA uses in relation to lending - but I know that my daughter’s college used that formula or something very similar as the way to calculate home value back when she was in college.
We were told to calculate our home equity based on the price we’d be likely to get if we had to sell our home in a hurry. That is, without spiffing it up, repairing things, painting, staging, etc. Without TRYING to maximize the sale price.