<p>I realize that schools that only use FAFSA do not use home equity but I've also heard that some schools cap the portion of home equity that they'll use. Does anyone know specific schools that do this?</p>
<p>Thanks.</p>
<p>At last count there were 224 schools that do. In addition to the FAFSA, they require the CSS Financial Aid Profile. Seek and ye shall find.</p>
<p>Rice U caps home equity.</p>
<p>I think this group caps home equity. <a href="http://568group.org/membership/members.html%5B/url%5D">http://568group.org/membership/members.html</a></p>
<p>Reecy, do you know of others? It is a big issue here in the northeast.</p>
<p>Reecy is saying all 224 Profile schools cap equity. Boston is saying only the 28 or so Group 568 schools cap equity. I would like to know who is right.</p>
<p>Not all Profile Schools cap equity (or, more properly, cap assessed home value). The 586 group schools (28 or so) have agreed to, and some other Profile schools are either capping home value or home equity. But the Profile formula doesn't include any provision for capping home value or home equity.</p>
<p>The consensus approach adopted by the 568 Group was to cap home value at 2.4 times income, and then deduct mortgage. </p>
<p>Read this thread from a few months ago:</p>
<p>And two of my posts from that thread below:</p>
<hr>
<p>It's not surprising that there's confusion over this point, even among the media. I've seen it described in media as "capping equity as 2.4 times income" several times-- but it's not that simple.</p>
<p>Here's the original recommendation of the 586 Group back in '01:</p>
<p>"Recommendation: Count home equity capped at 2.4 times income minus mortgage debt with professional judgment adjustments in individual cases."</p>
<p>BankRate got it right in their press piece:</p>
<p>"Under the new guidelines, the schools will count home equity, but cap it at 2.4 percent times income minus mortgage debt."</p>
<p>as did Smart Money:</p>
<p>"Last year a group of 28 elite schools, including Cornell, Amherst and Duke, agreed on common guidelines for determining need, which included capping home equity at 2.4 times income minus mortgage debt. This means that if you still owe $100,000 on your $400,000 home, and earn $80,000 a year, these schools will consider you to have only $92,000 in equity. "</p>
<p>The most recent official word I've seen on this is the GAO's report on the consensus methodology adopted by the 586 Group colleges- the report is dated September 2006 (see table 3, page 19):</p>
<p>"Home value is capped at 2.4 times income minus mortgage debt."</p>
<p><a href="http://www.568group.org/docs/gao.pdf%5B/url%5D">http://www.568group.org/docs/gao.pdf</a></p>
<p>And as I've said, individual colleges may have adopted formulas that deviate from the consensus approach adopted by the 586 Group-- best to check with the college you're applying to and find a FAO that knows his/her stuff.</p>
<hr>
<p>And from "Paying for College Without Going Broke" (Princeton Review, 2007):</p>
<p>"Let's take a family with income of $60K and a home valued at $200K, with a $100K mortgage. At schools that choose to cap the home value at 2.4 times income, the maximum value of this family's home would be 2.4 times $60K or $144K. The colleges will subtract the $100K debt from the $144K asset and decree that the family has equity of $44K...."</p>
<p>"However, let's take a family with a combined income of $60K, a home valued at $300K, and a mortgage of $200K. If the schools choose to cap home value at 2.4 times income, the maximum value of the house for assessment purposes is $144K. The colleges then subtract the mortgage of $200K. In this case, there is, in fact, no equity at all in the home as far as those colleges are concerned."</p>
<p>Most colleges that consider home equity do use some sort of cap, but practices can be very different in terms of what that cap is and how it is determined. Best thing to do is to ask the college financial aid offices of the schools you are considering.</p>