<p>All:</p>
<p>My parents are working professionals. My EFC is around $35K based on the EFC calculator. Here is the problem, the EFC does not take into account the negative sinking home equity in Florida. Here is the housing situation:</p>
<p>First home: Negative equity of -$125,000</p>
<p>Second rental home: Negatve equity of -$140,000.</p>
<p>Combined losses in 2 homes = $265,000</p>
<p>They do have 401K left. We have not saved a whole lot except for $30K for my education via Florida prepaid tuition and some educational IRA.</p>
<p>Based on the facts above, does it skew my EFC to a much lower number? I may have to decline offers from high tuition universities. My parents are wlling to chip in $15 to $20K per year for my college. In essence, I am looking for merit aids. This may preclude my dreams attending Stanford/Yale/George Town/Emory etc. </p>
<p>Please input your thoughts and ideas. Thanks much</p>
<p>I believe the lowest equity you can put on the financial aid forms is $0. I’m not positive about this but I’m sure someone will correct me if I’m wrong.</p>
<p>FAFSA EFC doesn’t look at anything having to do with your primary residence at all. The equity in the rental income is all it would consider…if that’s $0…so be it. I will say, if you put that down, make sure you have the documentation to support that the equity is indeed $0.</p>
<p>You say the second property is a rental income? Remember that the rent from that property is viewed as income.</p>
<p>Do you qualify for Bright Futures? With the other schools on your list, it would seem that you would. I hope you have some FL schools on your prospective college list. I know you “dream” of going to school elsewhere, but you might want to consider minimizing your undergrad debt and going to the dream schools for grad school.</p>
<p>^^^</p>
<p>Yes, the rent will be considered as income.</p>
<p>You can’t put “negative equity” on FAFSA - you have to put “0”. </p>
<p>*I may have to decline offers from high tuition universities. My parents are wlling to chip in $15 to $20K per year for my college. In essence, I am looking for merit aids. This may preclude my dreams attending Stanford/Yale/George Town/Emory etc. *</p>
<p>Your EFC will remain high. At least you know that NOW, and not when it’s too late to apply to schools that will work for you.</p>
<p>Those mentioned schools will likely expect your parents to pay the $35k+ since they don’t cover family contribution. </p>
<p>And, frankly, when your EFC is that high, schools often “cover” the rest with student loans, summer contribution, and work-study (as a Cornell mom recently discovered).</p>
<p>**The good news is **that if you were going to apply to the above-mentioned schools, then you likely have the stats for big scholarships at other schools. :)</p>
<p>Do not think that means that you won’t be challenged or that you won’t be around “other smart kids”. Many schools have honors programs and other special programs where many smart kids are concentrated.</p>
<p>What are your stats?</p>
<p>What is your intended major/career?</p>
<p>The only way to have “negative” equity is if the home is worth less than what is paid. So for zero equity in the rental (which is an asset even on FAFSA) they would need to owe more than what they can sell it for. Generally for rentals I have a real estate friend pull comps and I put them in my kids’ financial aid folder in case it’s needed for verification. For FAFSA schools the primary home isn’t considered. You can always apply to schools outside Florida, but you absolutely should apply and get accepted to one in state that you are willing to attend since your parents have funded with that in mind with the Florida pre-paid tuition plan. You might find out if those monies are transportable…many states have ceased that type of program but you should know the answer to that.</p>
<p>It is sad to see all my parents hard eranerd w-2 money is spent on two homes with incredible declining values. The rental income is so dismal. I hope someone looks into Florida with special pair of eyes. It is far beyond comprehension.</p>
<p>*I hope someone looks into Florida with special pair of eyes. It is far beyond comprehension. *</p>
<p>What do you mean by that? </p>
<p>Anyway…now that you know the facts (that negative equity isn’t going to help your situation), you need to come up with a realistic list of reach, match and financial safety schools that will be affordable.</p>
<p>It’s ok to apply to a couple of schools on your list “just to see,” but you have to be realistic and understand that they will expect a large contribution from your family. So, if that isn’t affordable, then you need to prepare yourself that those schools aren’t likely.</p>
<p>Also realize that just because a school costs $55k per year and your EFC is $35k, that doesn’t mean that the school is going to hand you the difference ($20k) in free money grants.</p>
<p>Often that $20k difference is filled with work-study, “student contribution from summer employment”, a Stafford student loan, and maybe a small grant if necessary. That often surprises people with highish EFCs…they think the school is going to cut them a check for the difference. </p>
<p>An Ivy mom with a highish EFC wrote me recently that her child’s school gave them nothing to fill the “gap” except work-study, a student loan, and student contribution. She was shocked because they had planned on getting a grant for the difference and having their child help them with their EFC. Little did they know that their child would be making up the “need”.</p>
<p>In addition to your Florida prepaid (which probably won’t pay much out of state, but will pay some - find out how much), find out how much your parents will pay for your education each year. That will largely determine where you should be applying.</p>
<p>What are your stats?</p>
<p>Negative equity occurs only when you owe more on the house than it it worth. If you paid more for the house than it is worth, but you can still get some money left after paying the mortgage on it, you do not have negative equity. There are many here in our area that have homes that are now worth less than what they paid. However, since they have down payments and pay off of loans over the years, the house is an asset. They would have some money in hand if they should sell the house.</p>
<p>Still, even with negative equity, primary home values are not considered on FAFSA, and zero is the lowest you can report for the second property. </p>
<p>Since you know that you will be needing money and that your EFC is high, take that into account when picking your schools. Not a problem including Emory, Stanford, other such schools on your list, but make sure that you have some financial safeties on your list and be prepared to make some tough decisions if you are accepted to a high cost school and do not get the aid your family needs for you to attend. For my son, it was not an issue. He had no problem pitching the files for those colleges that offered no money and had high costs. Didn’t give it a second thought. But that sort of thing gives many kids, especially kids who are on this site, ulcers. </p>
<p>Being in Florida, you have Bright Futures options and with stats that make you material for schools like Stanford, you probably have a decent chance at some merit money at a number of schools. Look for those options.</p>
<p>Florida is not the only place hard hit. As I said before, I live in an area filled with negative equity homes. Very expensive negative equity homes. Can’t get rid of them without paying for that big hole of debt because jumbo mortgages are out of the question here. Yet, we are lucky that we don’t live in an area totally devastated by other misfortunes.</p>
<p>Not a problem including Emory, Stanford, other such schools on your list,* but make sure that you have some financial safeties on your list and be prepared to make some tough decisions** if you are accepted to a high cost school and do not get the aid your family needs for you to attend. *</p>
<p>I think someone who already knows that he has an unaffordable EFC needs to make sure that a few schools are financial matches and financial safeties. Don’t apply to just one financial safety school.</p>
<p>If such a person applies to a bunch of schools that will likely be unaffordable, but only applies to one financial safety school, then he might feel railroaded into his lone affordable choice.</p>
<p>So, apply to a few affordable schools (affordable because of Bright Futures and/or affordable because of big merit scholarships).</p>
<p>I absolutely agree. I always feel that there should be several safeties on a list and that means in the financial area as well. It really makes things better to have some choices rather than stuck with the one safety in the bunch.</p>
<p>OP, much of the upper middle class and wealthy lost a significant part of their net worth in the last few years. Colleges will just look at what you have left. Your EFC is lower than it would be if you had equity in the homes. You are facing what most do-they can’t afford their EFC. That’s why state schools are so popular. It’s good that you know now and can fall in love with schools you can afford. Many don’t face facts until it’s too late to do that.</p>