FA Question: Inherited house, now worth $1M, now what?
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Anonymous
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Our HHI is $104K, but our house is worth almost $1M. We could never afford to buy a house like this, but I inherited it a long time ago.
When we apply for FA, does the equity in our house mean we will not be eligible? We can't afford to pay a mortgage on our income. DC is very interested in NESCAC schools, all private, all very expensive. I can't see it happening if our house is a factor in FA. Otherwise, I'm sure we'd qualify, as we have not a lot of savings and no investments aside from 401(k)'s. Anyone know? Anyone in a similar situation? I don't mean to cry poor, but we cannot afford any of the schools DC wants to go to (Amherst, Williams, Bowdoin, etc.) If you've negotiated this issue, I'd love to hear how you did it. TIA! |
Anonymous
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so what do you do with $100K income a year since you have not had a mortgage for a long time - your words ..... a long time ago....
put away money for college? Why should others foot the bill for your child? You can easily take out a HELC against the house. |
Anonymous
| My parents were in a similar situation. We got no FA at all, and there were 3 of us in college at the same time. They told my parents to take out the equity in the house to pay for school. |
Anonymous
| if you take money against the house to pay for some BS degree you are a loser. |
Anonymous
I am guessing that they use it to pay the property taxes and general maintenance of the house. Those do not go away when the mortgage does. |
Anonymous
| 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. |
Anonymous
| PP here. Also, we spoke to 2 of the schools you listed as well as Hamilton, W&L and Davidson. Consistent answer as to home equity in the calculation and full pay at approximately $60,000. We chose a less expensive option and are full pay there. Just couldn't justify the cost particularly since we have more kids in the pipeline who would like to attend college. If you've got the grades and scores to get into NESCACs then you will have plenty of opportunities along a spectrum of price points and just select the one that works best for your family. |
Anonymous
I don't feel bad for you due to your weird snobbishness about which schools use the FAFSA. You deserve your predicament for that alone. |
Anonymous
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If I recall your EFC is based mostly on income, not assets. Too much work for me to figure out, but here
http://ifap.ed.gov/efcformulaguide/attachments/091913EFCFormulaGuide1415.pdf |
Anonymous
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Sorry you find it "weird snobbishness", but actually it's sorting based on 2 factors: in that situation looking at need based aid you start with the list of schools that take FAFSA and not Profile. Then remove the schools that add their own supplement that requests home equity and adjusts for that. You've now removed a large majority of the top 500 schools in the US where you are unlikely to get financial aid because of the home equity. Is it "snobbish" to prefer that kid goes to a top 500 school when they have the grades and scores to get in a top 10 school?
Now go the other direction. Kid has the grades to get into the NESCACs. If net cost is your main concern I think you will actually do better going the other direction and looking at schools where the scores are so out of line they will give you full tuition + just for the academics. University of Alabama is one here that is like that and there are others. Actually think there are more schools in this group than the upper group. You're just not likely to get something that in the ratings is top 150. Schools here are looking to move up in rankings and need academic students to improve their scores. So you can go either of these directions to reduce cost, go to Williams or Amherst and borrow fund $60k a year, or something in between. It's all just a family decision, snobbish or not. |
Anonymous
| You're right that the EFC on the FAFSA is income based only. Asset based adjustment for EFC is only on CSS Profile or on the supplement from schools that take FAFSA. If you find a school that only takes FAFSA and doesn't request a supplemental form then they will calculate EFC just on income and won't worry about the house equity. |
Anonymous
Our income has not been 100K since I inherited our house. We lived on a very low income for a long time, which is why the house is a godsend. It only became valuable during the past 10 years or so as house prices have increased very quickly in our area. We have four kids, with all the associated expenses. Public schools. There have been few opportunities for saving much aside from 401Ks at work. If we take out a mortgage on our house, we will not be able to pay it. We can barely manage as it is, even though we are savers and live a very thrifty life. I am not crying poor. We do have a nice house (old kitchen and bathrooms, never enough money to renovate those!), but we'd be crazy to sell our house because of the good schools, and we'd not likely get a HELOC anyway because our income is not high enough. Just curious if anyone has worked this out favorably? Does this leave our kids solely at the mercy of merit aid? Don't know if DD will get into Harvard (who does?). Are we then only able to apply to FAFSA schools? Thanks for any advice! I'm just starting to look into this. I didn't realize our house would be such a problem in sending our kids to college! |
Anonymous
| This is stunning. Your net worth is over $1 million, and you want financial aid. What are you doing with your earnings? Just because you could not afford to buy this home does not mean you deserve FA. The sense of entitlement ... |
Anonymous
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! |
Anonymous
. This |