"Stanford University has become the latest top university to announce that it will no longer consider home equity when calculating how much money a student and her family can afford to contribute toward a college education," Inside Higher Ed reports. 

"The university's announcement quoted Stanford's board chair, Jeffrey S. Raikes, as explaining the change this way: 'Stanford is committed to meeting the full demonstrated need for every admitted undergraduate who qualifies for financial aid, without expecting them to borrow to meet their need. Removing home equity from the financial aid calculation is the first of what we expect will be several additional steps to further enhance our undergraduate aid program in the next few years.'

Stanford is not only highly competitive, but (based on sticker price) highly expensive. Tuition, room and board for 2019-20 has just been set at $69,962.

The issue of home equity is not one on which all colleges agree, and some fear that eliminating calculations of home equity favors those who are from families of means. The Free Application for Federal Student Aid explicitly states that the question on parents' investment holdings does not count 'the home in which your parents live.'

But the CSS Profile, run by the College Board, does ask about home equity. And the several hundred colleges that use that profile include many such as Stanford that are among the most generous in financial aid to those who are from low-income families. Just because students must report parents' home equity doesn't mean that colleges need to include the information in their calculations of institutional aid eligibility. Harvard and Princeton Universities are among those stating that they do not consider home equity. Princeton also states that it does not consider retirement funds. Yale University states that it does consider home equity.

... Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, said via email, 'Differentiating a family’s [ability] to pay for college is as much an art as it is a science, especially at the institutional and local levels. Where to draw up the dividing line on a student’s need requires one to know the local market, cost of living expenses, and student population. Deciding on whether to include home equity will advantage one group over another, unless the school is well enough resourced to provide enough dollars in their institutional grants and scholarships to mitigate those ups and downs. I would assume that is the case at an institution like Stanford.'"

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

Publication Date: 12/17/2018