Home Equity Can Reduce a College Student's Financial Aid
Some colleges and universities consider a parents home equity when doling out loans or grants for incoming students, but others dont even ask.
Q. Our son is a senior in high school and plans to go to college in the fall. We dont earn a lot of money, but our home is worth about $90,000 more than we paid for it 10 years ago. Will the equity we have in our home affect his ability to get financial aid?
A. It largely depends on which college or university your son plans to attend.
Some schools dont expect parents to tap their home equity to pay for educational expenses, but others will indeed cut the amount of money that they will loan or grant if the family home is worth much more than was paid for it several years ago.
The majority of public schools, including most state universities, do not consider a parents home equity when deciding how much financial aid a student can obtain.
But its a different story at many private schools, where the institutions not only ask about the parents home equity but often expect the folks to tap some of it to help pay college bills.
The admissions or financial-aid office at the college your son hopes to attend can tell you whether the equity you have in your house will be included as part of its financial-aid calculations.
If the school indeed will consider your home equity when doling out aid, make sure to ask about any exceptions or exemptions that can help to obtain the best aid package possible. For example, some schools will overlook a large amount of built-up equity if, say, a parent is disabled, retired or is unemployed.
It might even make sense to tap your home equity now and use the proceeds to make a large contribution to a tax-advantaged retirement account before you fill out your sons financial-aid application.
Though some schools now expect parents to use their equity to pay for college expenses, few expect a students mom or dad to raid his or her retirement nest egg to cover the cost.
Q. We made an offer to purchase our first home and followed your advice by making the offer contingent on the property first passing an inspection.
The inspector is coming out next week, but he does not want my wife or me following him while he reviews the property. Is this common? Can we insist that we be present when the inspection takes place? …