CSS Profile will it matter if assets are in cash vs home equity? Are there 'allowable' cash amounts?

<p>I understand that for FAFSA based calculations, the amount that parents are expected to use of their cash assets is fairly minimal (5-6%), but I just saw noted on another thread that this might be very different for CSS Profile schools. If there are cash assets and an anticipation of applying to private (profile) schools, would it be wise to use those cash assets to pay down the mortgage on a primary residence (if paying off the house is a goal anyway)? In our case the value of the home is not high (under 200k).<br>
Is there an amount of cash assets that are basically 'allowed' by profile colleges before it generally starts to affect financial aid? </p>

<p>Some Profile schools consider home equity. Others don’t.</p>

<p>As for the “allowed” assets, this is generally tied to your income (different income levels --> different allowances) and varies from one college to another.</p>

<p>Sorry, there is no easy answer here. Pick the half dozen schools your student is most interested in and run the net price calculator for each school both ways - (1) with cash assets and (2) with high equity - and see if it makes a difference.</p>

<p>No standard answer. The Profile schools that use home equity have varying ways of doing so. </p>

<p>Personally I would think long and hard about paying off the mortgage. You will lose any tax advantage if you itemize (for interest paid). In addition, the money in an account is much more liquid. If you need extra money for something, it’s not like you can sell a portion of your house to get the funds.</p>

<p>I would suggest you run the net price calculator on the college websites of interest. Do it using both scenarios…house paid off with reduced bank accounts, and house not paid off with money in the bank.</p>

<p>Also, keep in mind, that unless the college guarantees to meet full need for all, you might be doing these financial gymnastics for NO goo reason at all!!</p>

<p>As Sybbie and Thumper have said, the formulas that PROFILE schools use can vary from school to school. Some of them use full home equity amounts, some don’t include them, some cap them at multiple of income (2.4x and 1.2x are typical). So as a generality, overall if one takes a shot gun, random approach in picking schools, it’s better to have the money in home equity than in cash assets. But that doesn’t help you a bit if the schools YOUR student wants all use full home equity values. So you run the NPCs and you can get some idea how the schools use home equity. Or call the fin aid office directly and outright ask.</p>

<p>Also take a good look as to how to value your house. It’s the NET amount you’d get if you sold your house quickly. Not the amount you might be able to get. Do some research on what the max value of your house would be. </p>

<p>And, yes, most schools don’t even guarantee to meet full need. </p>

<p>I read that up to $40,000 is considered sheltered as an emergency fund. My DD applied to a number of schools, some of which were full need, and the difference in how they calculated our need ranged by about 8 or 10k depending on the school. The non full need schools ended up offering her merit so they were comparable. </p>

<p>The savings protection allowance is based on oldest parents age and how many parents. You can google EFC formula guide PDF to find out exactly how your efc is calculated.</p>