Shifting assets
Because your principal residence is not a reportable asset on the FAFSA, it doesn't matter how much equity you have in your home; whether the house is worth a mere $100 more than when you bought it or you have $300,000 worth of equity, it won't count against you.
Paying down the balance on your home prior to applying for the FAFSA is one of the strategies recommended by financial professionals for those who need to lower their cash on hand and savings. "To get the most financial aid, consider shifting some assets from reportable categories into nonreportable ones before you sit down to fill out your FAFSA," said TIME Money. "For example, you might use some money from reportable assets like bank accounts and mutual funds to pay down the mortgage on your home, which doesn't count as an asset on the FAFSA."
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