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Homeownership and financial aid

DebDabDebDab Registered User Posts: 6 New Member
Our daughter is HS class of 2018 and we are prepared to do what it takes to pay for her to go to a small private college. We do not have a college savings plan for her. She is our only so we are fully new to this process. We have two homes, each valued at $500K: our primary is half-owned by us and half via bank mortgage, and our other is a vacation home and B&B that is fully paid for by us and owned by an LLC with my husband and I as the LLC managers. We don't know how home ownership will affect our FAFSA. Must the LLC-owned home be included in our assets? How is equity in the primary home viewed? Are there shifts in borrowing and/or ownership that could benefit us in getting funding for private school? Thank you for any advice you can provide.

Replies to: Homeownership and financial aid

  • sybbie719sybbie719 Super Moderator Posts: 20,896 Super Moderator
    edited October 11
    The vacation home is an asset. Any money generated from the B&B will be additional income on both the FAFSA and the CSS profile/institutional aid forms

    While the equity in your primary home is not counted on the FAFSA, it will be counted on the profile/institutional aid forms. Each school uses a different formula to determine how they will assess the equity.
    Post edited by sybbie719 on
  • thumper1thumper1 Registered User Posts: 63,940 Senior Member
    The only shift in ownership that will take your rental home off the financial aid table is to give it away free and clear. If you sell it, you will have the profit in the bank as an asset. Owning it as a fully paid for property makes it an asset.

    I hope you understand that need based aid is for students with financial need. They don't own second homes valued at half a million dollars. The colleges are not going to give you need based aid so that you can keep a second home...that is a choice to own.

    @BelknapPoint where on the fafsa do these folks put their LLC owned bread and breakfast. Or do they? And the rents from it as a B and B?
  • DebDabDebDab Registered User Posts: 6 New Member
    Thank you thumper1 and sybbie719 for your responses, both providing very valid points and helpful information.
  • DebDabDebDab Registered User Posts: 6 New Member
    BTW, just to clarify, I've referred to our daughter as our "only" for simplicity sake, as she will be our only going to college. We do have a son with special needs who has already required great expenditures and will require our financial support throughout his life - things that don't really come through in aid packages - so while I know that my post could appear to be greedy and even obnoxious, and we don't have hardship and are mostly fortunate, there is more to this story. Even with these replies, I'm reminded to stop thinking in terms of only FAFSA and that I need to learn more about other formats, so already this has been helpful. Again, thank you.
  • BelknapPointBelknapPoint Registered User Posts: 2,961 Senior Member
    edited October 11
    where on the fafsa do these folks put their LLC owned bread and breakfast. Or do they? And the rents from it as a B and B?

    The non-primary home real estate is reported on FAFSA question 91:

    As of today, what is the net worth of your parents’ investments, including real estate? Don’t include the home in which your parents live.

    The property is owned by an LLC which in turn is owned by the parents, so it counts as a parent asset. The B and B income would be reported just as any other small business income.
  • AroundHereAroundHere Registered User Posts: 2,574 Senior Member
    Does your daughter have good grades and test scores for merit aid? What is her major and home state? Because it sounds like you will not qualify for much in need-based aid and merit is a great way to lower your costs.

    I'm not sure how it is treated on the FAFSA or Profile, but I'd certainly argue with a financial aid office if they assessed money set aside for your son in a special needs trust as an asset for determining your daughter's financial need,
  • BelknapPointBelknapPoint Registered User Posts: 2,961 Senior Member
    I'm not sure how it is treated on the FAFSA or Profile, but I'd certainly argue with a financial aid office if they assessed money set aside for your son in a special needs trust as an asset for determining your daughter's financial need,

    A Trust that designates a sibling as the beneficiary would not be reported on FAFSA. The same is true of any funds to which the student and/or parents do not have any legal right.
  • DebDabDebDab Registered User Posts: 6 New Member
    Very good Midwest A student 31 ACT Biology major strong ECs so merit could be out there. We do have a special needs trust for our son. These replies are very helpful and highlight our need to learn more fast and get going on that now! Thanks.
  • AroundHereAroundHere Registered User Posts: 2,574 Senior Member
    Small schools with big merit in the Midwest include Earlham, Beloit, many others at ctcl.org

    Most small liberal arts schools attract a share of premeds each year, so finding a good bio program should not be an issue.

  • DebDabDebDab Registered User Posts: 6 New Member
    Nice! CTCL looks like a great resource. Thanks.
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