<p>Yes that is right. Only a debt directly against an asset may be used to reduce the value of that asset. For instance if you had a margin account loan against a stock account it would reduce the value of the stock account. Or if you had a second home or rental home then you could reduce its value by any mortgage against it. But if you borrow against your primary home to finance a business the debt is against the home, not the business. You cannot reduce the value of the business by the debt against the home. And, of course, the the primary home is not a reportable asset on FAFSA anyway.</p>