<p>We have a large investment portfolio. We also have a large house payment. The idea is to use the growth in the investments to pay part of the monthly mortgage. The payment is more than our monthly salary can handle. We’ve been doing this for about a year.</p>
<p>For financial aid purposes, would it be better to reduce the portfolio by putting it into the house? Household income is $90K… we have a college freshman going to CC and a high school senior, plus 4 younger kids.</p>
<p>By the way we don’t want to do loans, #1 is happy going to CSU and living at home, and #2 would like to go to UCLA (which would mean living there). We’re in CA.</p>
<p>When you say “putting it into the house”, I assume you mean paying down the mortgage and not making imrovements to the house. This will work only if the schools you are looking at use ONLY the FAFSA form. The FAFSA does not look at the value of your home nor the equity you have in it. The CSS/Profile form, which some of the more selective colleges use, does ask for these figures. </p>
<p>Keep in mind that redirecting your assets in this way may not result in the huge savings you might be looking for. I have seen cases similar to your’s that involved moving 75K in assets which resulted in only 5K savings per year in aid. Of course everyone’s case is unique and your results will be different. While 5K/year in aid would be welcomed, the trade-off is that you can no longer easily get at that money if you should need it in the event of an emergency. The capital gains/losses which are incurred from redirecting the assets may also change your outcome.</p>
<p>Simply adding the money to your principle will not change your monthly mortgage amount either. I think you would actually have to look at refinancing, but I’m not sure.</p>
<p>FA is largely based on income. Sometimes these financial gymnastics don’t do anything to change FA. </p>
<p>CSUs do not give much/any “non-loan” aid to those with incomes of $90k. That’s above Cal grants and the EFC will be too high for Pell.</p>
<p>While you may want to reduce your mortgage to improve your cash flow, you may not be able to get yourself into a situation where your EFC is low enough for any grants. </p>
<p>It’s usually not a good idea to have all your money in your home. You need to have money available for emergencies. If you were to do this, how much would you leave yourself with?</p>
<p>Next year, you will have 2 in college, so the EFC will split…but maybe not enough to get Pell. With an income of $90k (plus income from investments???), your EFC for one child could be about $20k. So, splitting that to $10k each isn’t going to gete you Pell. EFC has to be below about $5k to get Pell. </p>
<p>Run some CSU EFC calculators and see what happens. You might get good news. </p>
<p>BTW…if your senior son has good stats, he should apply to universities that give merit or aid. Transfer students often get less aid and merit. sometimes it’s much cheaper in the long run to start at a Univ with great aid and merit, then to go to a CC first.</p>
<p>Thanks to both for the rundown. I am so nervous about doing FAFSA, don’t know why. Thanks for mentioning CSU EFC calculators too. Will look into those.</p>
<p>Ah, student stats… There’s the rub. Good but not enough for merit aid for either kid.</p>
<p>Moving liquid assets to home equity COULD help your grant aid IF your income is low enough. Check out the Cal Grant rules and the FAFSA formula, run the formula various ways. If it does not help to do this, it could actually hurt you as if your mortgage is fixed you may still have a higher payment yet not have those liquid assets.</p>
<p>It is generally only worthwhile if your income is low enough to allow grant aid. You might check the new Berkeley middle class aid being created, too.</p>