What does it mean?
Most colleges do not consider home equity when calculating financial aid. These colleges only require students to submit the FAFSA financial aid form. The FAFSA does not ask for home equity information. Some colleges do consider home equity in their financial aid calculations and students must also submit the PROFILE financial form to receive institutional aid.
What does it have to do with how much you’ll have pay for college?
If you apply to a PROFILE college, it’s possible that your Expected Family Contribution (EFC) will increase if you have a large amount of home equity. There isn’t any set rate for the percentage of home equity considered in financial aid formulas. PROFILE schools generally assess parental assets at 5.64% which would include home equity. However, they generally cap the amount at two to three times the amount of income. Most schools don’t publish the rate they use so be sure to use the net price calculator (NPC) or ask the school’s financial aid office.
Where to learn more:
FAQ: Does home equity affect financial aid?
Does Home Equity Affect Eligibility for Financial Aid? What If You Sell the Family Home?