How do schools treat home equity in determining financial aid?
Most schools will expect that a family’s home equity will be used in its determination of a family’s ability to pay. The School and Student Service for Financial Aid (SSS) methodology considers home equity a critical factor in determining the family’s total resources and in evaluating comparative financial strength among families, since a family with some home equity may have more financial options available to it than one without home equity. However, only the amount of home equity that is less than three times the family’s total income is used in the formula. Based on their policies, geographic location, or knowledge of local real estate market trends and conditions, some schools treat home equity differently, either disregarding it completely, not using the SSS income cap, or re-evaluating the reported amount. More guidance on reviewing home equity can be found in the NAIS book Financial Aid Administration for Schools, Second Edition. This book can be ordered through the NAIS Bookst
