FA Question: Inherited house, now worth $1M, now what?

[Anonymous]

Anonymous wrote:

Anonymous wrote:The same thing happens on College Confidential all the time. Some person innocently posts about his/her financial situation, asks how that will affect their ability to qualify for aid, and is called out by scores of subsequent posters for being greedy. So tiresome - if you don't have information for her about how home equity is factored into colleges' need-based aid determinations, could you just move on and skip the comments about greediness.

More than ever, college financial aid is a game. Colleges want to use their aid dollars to improve the profile of their class and generate the greatest return they can - it's way better for them to give $25K to 2 kids, both of whom will then pay $25K in tuition than it is to give a full $50k ride to one kid who won't pay anything.

It's also a game for parents. What school will look at my financial situation/child's qualifications most favorably and give me the greatest amount of $. It is not selfish or in any way inappropriate for the poster to ask. My advice to her would be to find schools that don't take home equity into account when tabulating your assets. Most do, but many do not.

You sound like you know what you're talking about. As a follow up, how do you recommend the OP determine which schools do take home equity into account and which don't? Do colleges consider whether both parents work? Thanks.

If you are really interested, this is a great resource about how different schools consider home equity:
http://www.thecollegesolution.com/will-your-home-equity-hurt-financial-aid-chances/

As noted above, none of the FAFSA schools take it into account. But about 260 schools, usually private and including the most selective schools, do consider it. For substantive discussions about anything related to colleges, I would refer people to College Confidential's Parents forum and Financial Aid forum.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You could sell the million dollar house, move into a 200k apartment, and use the 800k profit for college expenses.

+1

More like sell the house and buy a 4-700k house. Your income can't support a million dollar house maintenance, taxes and utilities.

Oh please. It's not like the OP has a drafty ballroom to heat and acres of formal gardens to keep up. Some areas have just appreciated disproportionately. They have 3 more children in the public schools, so it's not likely that they can move and stay in their school district.

I agree with the advice to apply to schools that don't look at home equity as well as those who might want to woo your kids. We're saving what we can, but our kids know we're not going to sell the house to put them through college!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You could sell the million dollar house, move into a 200k apartment, and use the 800k profit for college expenses.

+1

More like sell the house and buy a 4-700k house. Your income can't support a million dollar house maintenance, taxes and utilities.

Oh please. It's not like the OP has a drafty ballroom to heat and acres of formal gardens to keep up. Some areas have just appreciated disproportionately. They have 3 more children in the public schools, so it's not likely that they can move and stay in their school district.

I agree with the advice to apply to schools that don't look at home equity as well as those who might want to woo your kids. We're saving what we can, but our kids know we're not going to sell the house to put them through college!

What a scam.

Live with in your means you idiots.

[Anonymous]

OP, based both on the information you have provided and your lack of understanding of how financial assets work, it sounds like you need some financial help to learn how to live within your means. Borrow a book from the library or download some materials to help you understand more about your income and how to manage it better.

[Anonymous]

What? The OP said that the HHI of 104K was a recent thing, and that they had been living on much less until recently.

Let me tell you, OP, as someone who is saving for college and shopping for a nursing home for a very sick parent--do not sell your house in order to finance college. Thank goodness my parents held on to their outdated, old house in a very expensive area for all those years, because that is the only real asset they have and we are going to consider ourselves lucky if its sale is enough to cover their expenses. Your financial security is much more important than financing your children's dream college.

[Anonymous]

Anonymous wrote:What? The OP said that the HHI of 104K was a recent thing, and that they had been living on much less until recently.

Let me tell you, OP, as someone who is saving for college and shopping for a nursing home for a very sick parent--do not sell your house in order to finance college. Thank goodness my parents held on to their outdated, old house in a very expensive area for all those years, because that is the only real asset they have and we are going to consider ourselves lucky if its sale is enough to cover their expenses. Your financial security is much more important than financing your children's dream college.

I think people were saying that the house IS an asset like any other - and if she wants to send her kid to an expensive school, sell the house. I don't think they were saying that's a great idea in the long run, but rather that she has that choice --- and colleges see it as such.

[Anonymous]

How would you feel if someone had 1 million in cash saved but didn't want to use it? OP is what's wrong with america. pay your fair share and let the people who are really in need use the scholarships. I am also offended that you would tie up the scholarship office and burn man hours dealing with your dumb ass.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Similar situation here with similar HHI and paid off house around $1mm. FAFSA schools and Harvard (and I think Yale and Princeton) don't count home equity in calculation. All others that use CSS Profile did. We qualified for no financial aid and kid didn't get in to HYP. Every NESCAC we spoke to use Profile. Most FAFSA only schools are lower end of selectivity scale and we couldn't find a match there. Ended up we are full pay. You can borrow against house or student loans, but the calculated EFC was roughly the cost of the schools in our case and was due to the available equity in the house.

OP here. This is just what I didn't want to hear! Our situation sounds identical! DD isn't interested in HYP (too big), but could get into NESCACs, none of which offer merit aid. We cannot full pay, though! Do you have only one kid? If we had one kid, then maybe we could wrangle something, but our expenses are too high to allow us to pay a loan on the house. Is your child in a public school? There are some in our state that are lower cost, so we may be able to manage that with loans, etc. DD will be so disappointed to find this out! She's working so hard and wants desperately to go to a NESCAC school!

Many people work very hard and want desperately to live on a decent hole close on ie a mlion dollar home. But it's not happening. It's either the house or a "dream collegel". Personally I think it's a pretty easy choice, your DD needs to suck it up.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Similar situation here with similar HHI and paid off house around $1mm. FAFSA schools and Harvard (and I think Yale and Princeton) don't count home equity in calculation. All others that use CSS Profile did. We qualified for no financial aid and kid didn't get in to HYP. Every NESCAC we spoke to use Profile. Most FAFSA only schools are lower end of selectivity scale and we couldn't find a match there. Ended up we are full pay. You can borrow against house or student loans, but the calculated EFC was roughly the cost of the schools in our case and was due to the available equity in the house.

OP here. This is just what I didn't want to hear! Our situation sounds identical! DD isn't interested in HYP (too big), but could get into NESCACs, none of which offer merit aid. We cannot full pay, though! Do you have only one kid? If we had one kid, then maybe we could wrangle something, but our expenses are too high to allow us to pay a loan on the house. Is your child in a public school? There are some in our state that are lower cost, so we may be able to manage that with loans, etc. DD will be so disappointed to find this out! She's working so hard and wants desperately to go to a NESCAC school!

When you have four kids on a modest income, they don't get to enjoy the finer luxuries of life.

[Anonymous]

Why doesn't your daughter want to apply to Harvard or Yale? Or Princeton ? If she thinks she might get in, it is dumb not to apply bc she is likely to get a better aid package. I would insist she apply to several wealthy ivies, compare aid packages to various schools, and emphasize that it would be dumb to turn down Yale to go to Amherst if going to Amherst means tens of thousands of dollars more loans to pay back.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:The same thing happens on College Confidential all the time. Some person innocently posts about his/her financial situation, asks how that will affect their ability to qualify for aid, and is called out by scores of subsequent posters for being greedy. So tiresome - if you don't have information for her about how home equity is factored into colleges' need-based aid determinations, could you just move on and skip the comments about greediness.

More than ever, college financial aid is a game. Colleges want to use their aid dollars to improve the profile of their class and generate the greatest return they can - it's way better for them to give $25K to 2 kids, both of whom will then pay $25K in tuition than it is to give a full $50k ride to one kid who won't pay anything.

It's also a game for parents. What school will look at my financial situation/child's qualifications most favorably and give me the greatest amount of $. It is not selfish or in any way inappropriate for the poster to ask. My advice to her would be to find schools that don't take home equity into account when tabulating your assets. Most do, but many do not.

You sound like you know what you're talking about. As a follow up, how do you recommend the OP determine which schools do take home equity into account and which don't? Do colleges consider whether both parents work? Thanks.

If you are really interested, this is a great resource about how different schools consider home equity:
http://www.thecollegesolution.com/will-your-home-equity-hurt-financial-aid-chances/

As noted above, none of the FAFSA schools take it into account. But about 260 schools, usually private and including the most selective schools, do consider it. For substantive discussions about anything related to colleges, I would refer people to College Confidential's Parents forum and Financial Aid forum.

Thanks, PP.

[Anonymous]

Whether or not OP's children should be able to attend an expensive private school without tapping the home equity is an interesting question. Without taking sides on that question, however, I weight in that there is nothing at all wrong here about OP posing her question, and those posters above who were all over OP for asking really are not being fair here. In reality, if OP's job does not carry a pension and if OP doesn't have significant other liquid retirement savings , OP will need every dime of that home equity for her retirement. I figured out not long ago that without a pension, I would need something like $1 million in retirement assets just to afford the retirement that a 30 year public school teacher can enjoy. Are there people in much worse shape? Of course, there are -- and the strongest students in those lower income situations can get full rides. But does that mean 100% of FA should go to people on the poverty line of America? Not necessarily. How to allocate aid is a more complex social problem. Those above who commented on the mortgages that they pay, unlike OP, also benefit from a tax system through which we all subsidize your interest payments so you can build your own nest egg through a home larger than you might otherwise be able to afford. Look, college is expensive and there are just few easy answers except for the very wealthy. And in today's society -- having 1 million in assets may put someone very high on the relative asset /net worth scale nationally, but if a person wants to modestly enjoy retirement and has no pension, no supplemental health insurance, and lives until they are 90+ years old, that still takes work. Of course, that is the role of state universities in our society. I attended one b/c my working class parents could not afford private schools. My DC attends a private because - one generation later -- the school DC most liked was a private and we could afford to pay for it.

[Anonymous]

Anonymous wrote:Why doesn't your daughter want to apply to Harvard or Yale? Or Princeton ? If she thinks she might get in, it is dumb not to apply bc she is likely to get a better aid package. I would insist she apply to several wealthy ivies, compare aid packages to various schools, and emphasize that it would be dumb to turn down Yale to go to Amherst if going to Amherst means tens of thousands of dollars more loans to pay back.

because they are "too big". see, OP's daughter must fulfill her every desire in respect to choosing a college.

[Anonymous]

Every school has a Net Price Calculator on their website that are usually pretty accurate (unless you own your own business) to help you calculate your cost of attendance. Use this tool prior to applying so there are not huge surprises. This is how you calculate your EFC(expected financial contribution). Unfortunately, colleges consider your EFC to be a combination of savings, future earnings and loans. As a poster mentioned earlier, College Confidential's financial aid forum is a great source for help.

[Anonymous]

PP here with the similar situation. We decided that a state school at full pay was the answer for us. Just couldn't find the perfect fit otherwise with more expensive FAFSA only schools and merit options. FAFSA only schools also only provide a fraction of the calculated need. In our case it really didn't work out to much different than full pay at a state school, and you don't have to worry about next year's award. We spent a good bit of time figuring that out so I hope it helps. Yes, we have more kids in the pipeline, but so far so good. Like I said before there are many different choices at many different prices. One could be sending the kid to the NESCAC school if they will loan her the $60k/yr. We decided that wouldn't work for us and went another route, which has turned out just fine. Good luck to you and your daughter!