My grandparents and my parents both tell me my chances of receiving fin aid are lower since my family owns a house worth around $1.3-$1.5mil .
They also told me the more equity your family owns, the less need-based aid you get? Could parents here confirm or refute this?
Are you asking this with regard to FAFSA or CSS Profile?
It’s true that it goes better for you if it’s mortgaged to the hilt.
Will a large home hurt you? No. Will a million dollar estate hurt you? Yes.
Why do you think you “need” aid? What other circumstances would dictate this?
Two possibilities:
In both #1 and #2 it would seem that you should not be a candidate for need-based aid because your family had the resources. Them making a decision to not apply resources that they have to fund your education is not a grounds for receiving need-based aid.
So, to your original question: Yes, it would and should prevent you from getting much need-based aid.
Assets owned by your parents are hit at about 5.6% by FAFSA calculators after the protection allowance, with some exceptions such as the primary home. So home owners do get a break that way from schools that use FAFSA only Schools that use additonal info may and often do ask for home equity values of the primary home and include that in the assets. Some schools do cap that amount to the AGI (income) at varying amounts (1.2 and 2.4 seem to be amounts often used) So in many cases, having the home as an asset is less of a hit than having that same market value in other assets, since that break is there for a number of schools, along with leeway in coming up with a net value for your home.
So, yes, depending upon the school, it could make a difference in the financial aid package.
Schools, at least private schools, rightfully expect that equity can be tapped as a source of paying educational expenses.
Income is considered more relevant than debt. If your family makes $15,000 a month, private schools will generally assume that you can free up $60,000 for education expenses even if you have a great deal of other bills.
How much have your parents said they will contribute for your college expenses?
They are absolutely right on this, to the tune of the 5.6% mentioned by @cptofthehouse
Jar- why is this a surprise to you at this point in the process??? At some schools, owning a home worth this much is a better way to hold assets than having the dough in a money market account. But it’s still a large asset, no? Do you see the logic here?
Do you think people who have a big chunk of savings should just be able to buy a big house and then poof, no money, schools should hand them financial aid?
I’m pretty sure it makes a difference whether your parents paid for the house in cash or took out loans to do so.
@blossom I initially thought they only cared about family income, as according to the net price calculators. But yea, I definitely see why having a house would be a minus.
@Pizzagirl Ha! I wish…
@Coriander23 As far as I know they’re still paying for the house, but they didn’t take out loans. They put down an initial down payment, and are still paying a monthly fee. They also bought it in 2006-2007, so the house is worth around $200k more in 2014-2015 than it was then.
That monthly fee is very likely a payment on a mortgage (meaning, a loan).
Jar jar…what is the equity in this house? That is what will matter for schools that consider home equity in their financial aid equations. If the house is worth $1 million dollars, and your parents owe $999,999 on it, it won’t be as much of an issue as a $1 million dollar house where they only owe $10,000.
The equity is a huge asset against which your parents could borrow money…if the equity is sufficient. That is how colleges view this that consider home equity in their equations.
ETA…schools that use ONLY the FAFSA do not look at primary home equity…at all. But they DO look at other real estate your family owns in addition to your primary residence. Does your family own additional real estate…or just your primary residence. Are you talking about schools that use JUST the FAFSA, or schools that also use the Profile or their own form?
@thumper1 I’m talking about schools that also use the CSS profile.
They DO own real estate… they have a home in South korea which they have had for about 10 years. “Homes” in korea are actually not like the houses in the US, but are in large, 10-20+ story apartment buildings. Our “home” in korea is currently going through a renovation mandated by the apartment owners, so its value will certainly rise.
Apparently, many South Koreans who immigrate to USA don’t sell their former homes.
Again, I’m not sure how the colleges would figure out if my family owned property in other countries.
FA is tough to get these days.
is the property vacant or is it rented?
if it is rented, then I believe that needs to be mentioned on their US tax return.
It is also still an asset, do they have a trust or other entity set up to manage their foreign real estate?
So, you seem to be implying in Post #15 that if you leave the $1.5 million second home in Korea off of your CSS Profile and FAFSA financial aid forms that colleges might not figure out your fraudulent action?
But you also state that many South Koreans who immigrate to the U.S. don’t sell their former homes. Do you think the U.S. government and colleges don’t know this?
The same way they find out if your family owns property in this country - you tell them.