Timing of an Appeal for More Aid and Appealing the Asset Value of Unsold Real Estate
March 07, 2011
How soon after filing the FAFSA can I request a professional judgement review (without seeming overanxious)? We tried to sell our previous home last year without success. The home is vacant and not used for rental. Naturally we have to list this as an asset which makes our total assets look like more than they are. Furthermore, the value we used was taken from the county tax records, which does not accurately reflect the downturn in the housing market (or the fact that no houses in the area are selling for that amount), and also inflated our total assets. We intend to use the money from the sale to pay down our current mortgage. — G. L.
You can contact the college at any time to request a professional judgment review. Don’t worry about seeming overanxious, as this does not affect the outcome of the review.
You do not need to wait until you receive a financial aid award letter from the college to appeal for more aid. However, it is best to wait until you receive the Student Aid Report (SAR) after submitting the Free Application for Federal Student Aid (FAFSA). Receipt of the SAR is an indication that the college has received the financial information from your FAFSA.
The FAFSA ignores the net home equity in the family’s principal place of residence, but does consider the net home equity for other real estate. The CSS/Financial Aid PROFILE form considers the net home equity for both, but caps it at 2-3 times income.
Because the Higher Education Act of 1965 specifically addresses the treatment of real estate as an asset, the college financial aid office will be predisposed toward denying your appeal.
To increase your chances of getting a positive outcome, gather as much documentation as possible that demonstrates that your situation is unusual. For example, ask a real estate agent to pull data from the multilist showing average number of months unsold for similar properties or to provide a statement that no similar properties have sold in the last year. Data comparing the current real estate market to previous years could also help, such as the total number of listings, the average selling price, the ratio of selling price to county assessments, and so on. Provide information about the price at which you listed the property and the number of months it has remained unsold. Use the Federal Housing Index Calculator on the FinAid site to calculate the minimum derived value of the property.
It would also be a good idea to get a formal appraisal of the property. Not only will this document a lower value for the property, but you might be able to use that appraisal to appeal the county assessment to get a reduction in your property taxes.
Your appeal for an adjustment to your assets will be based on two arguments: (1) It is unreasonable to count the house as an asset because you have been unable to sell it and (2) If the house is counted as an asset, the asset value should be less than the county’s assessment.
Also note whether there have been other changes in your family’s financial circumstances that should be mentioned in the professional judgment review. Did anything change from last year to this year, such as a salary reduction or a suspension of bonuses? Is there anything that distinguishes your family from typical families? If the college financial aid administrator agrees with your arguments concerning the home’s value, but feels uncomfortable making such an adjustment, they might give you the benefit of the doubt on other adjustments.