What @thumper1 said, that you would use the equity in your out of state house, take out a mortgage or refinance to the extent you are able so that the value of the house is as close to 0 as a bank will allow you to go. You then take that money and pay cash for a new house in your new state. Again, there are all sorts of risks, such as a bank will not let you get a big mortgage, you lose the tenant or your jobs, there is another real estate down turn and the value of one or both houses drops or there are unintended tax consequences or the income on the rental in the other state still puts your income too high for FA or FA disallows some of your deductions related to the rental you own and you end up not getting aid. Obviously a lot to think about and talk over with one or more professionals if this is of interest.
Risks is right.
You know…if the OP can get a home equity loan for,the house they own, they could use it to pay for college for their kiddo.
How is that different than paying cash for college or getting a parent plus loan? They will be paying for their kid’s education until they are 80 if they finance it through home equity.
The point was that if OP lived in the out of state home she would qualify for FA.
We don’t really KNOW if the OP would really qualify for need based aid if they did your plan.
We don’t know the college.
We don’t know IF the college meets full need.
We don’t know if the college considers home equity in primary residence. If they do…and the OP buys a home with the proceeds from the equity in the rental…this plan could be for naught.
And the real rub is…if this IS a competitive school that meets full need…we don’t know of the student will even get accepted. The parent would need to make this financial change before filing the FAFSA and Profile…which would come before acceptances were issued.
So…parent could do as SeekingPam suggests, only to learn that their kid didn’t even get accepted at the college that costs a lot.
There is another very knowledgable poster on this forum. She says…don’t ever do anything for financial aid gain that you would not consider doing anyway.
This is the premise from OP’s post
The OP was asking for areas to explore with regard to housing. Obviously without knowing anything more all anyone can do is give areas to explore. Then it is up to the OP to explore them or not and consult professionals including mortgage bankers, tax advisers, and guidance counselors (or not if this is not of interest).
Good point that kid has to get into a meets full needs college for this to matter. Some colleges appear to be meets full needs and really are not.
OP, there are decent college financial aid experts out there (and scammers who will just take your money). A decent one comes recommended by people you know and will talk to you over the phone before charging you anything and will make a quick assessment as to whether he or she can even help you in the first place.
We have friends who called someone, a W2 income employee with no special circumstances and were very quickly told they would not qualify and not to bother seeing him. Their friend who had recommended the guy had a special circumstance and was able to qualify for substantial aid.
Best advice
Definitely a lot to chew over, and I think the fact that some colleges will look at the equity in the house you do live in (which I didn’t know) makes the idea less appealing. But I agree that this should be a motto of CC:
don’t ever do anything for financial aid gain that you would not consider doing anyway