Most state and private institutions do not consider your primary home’s equity as a factor in financial aid determinations because these are based on FAFSA calculations of your expected family contribution. However, some private colleges, especially the expensive Ivy League types, use an additional aid disclosure form, CSS/Financial Aid Profile. Such schools are quite interested in your home equity, so expect that it will be included in the numbers should you choose this school for your child. Comprehensive college financial planning should include research on different schools’ financial aid policies and how they treat home equity to help in evaluating which can offer your child the best options. Normally, schools that base their computations on profiles would assess equity at 5% for financial purposes. Assuming home equity of, say, $500,000 dollars is included, then that means $25,000 more for the Expected Family Contribution and less for the financial award.
http://collegefundingfreedom.com/college-financial-planning-considerations-effects-home-equity/
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