by A.W. Berry

Created on: August 20, 2009

Owning more than one home affects the Free Application For Federal Student Aid (FAFSA) by increasing net asset value for a family. Since assets are a significant factor in the FAFSA 'application', and the FAFSA review process, reducing the value of these assets can potentially increase the amount of Federal financial aid qualified for. Reducing asset value can be done, but may take financial resourcefulness, and a willingness to convert and/or transfer ownership of those assets to different financial instruments and/or persons.

I: HOME FACTORS WEIGHED IN THE FAFSA 'METHODOLOGY'

There is more than one variable of home ownership that can affect the influence of a second home on FAFSA. Each one of these elements may influence the designation of the home as an asset, and the weight of affect the home has on the student aid application. The greater the asset value and/or income from the second home and the closer the connection of ownership is to the FAFSA applicant, the greater the potential reduction in FAFSA qualification(s). The following list comprises aspects of second home ownership that can influence FAFSA.

* Home value(s)
* Income from the home
* Documented owners
* Property appreciation
* Location of home

Obviously the more expensive the property is the greater the value of the asset and henceforth, its influence on FAFSA. Additionally, if the real estate is used for rental or lease, an income derived from such may also have bearing on student loan qualification. Similarly, if the home's value has or is expected to appreciate in value, this may be a factor in the FAFSA 'Federal Methodology' depending on how elaborate it actually is.

If the home is not owned by either the FAFSA applicant(s) or the FAFSA applicant(s) parents, then the important of the home on the application is likely reduced. Lastly, if the home is owned abroad in another jurisdiction via international business held trust, it may not qualify as ownership in so far as FAFSA is concerned. Moreover, depending on where the second home is located i.e. either domestically or internationally, its assessed value may vary thereby further factoring in to FAFSA.

II: AFFECTS OF HOME OWNERSHIP ON FAFSA:

If a particular home is considered relevant by the FAFSA process it can cause the 'Expected Family Contribution' (EFC) to rise. In such case, there can be a number of potential repercussions on the student aid application. Generally, the greater the EFC, the less likely FAFSA will be approved and if it is approved,

• 1
• 2
• Next Page >>