How does home equity affect my child's financial aid?

It depends entirely on which form a school uses. On the federal FAFSA, the equity in your primary residence is not counted as an asset, so a paid-off or appreciated home won't raise your Student Aid Index. That's why federal aid can be generous even for house-rich families. The CSS Profile is different: many of the roughly 200 schools that use it do count primary-home equity when awarding their own institutional grants, though some cap it as a multiple of income. Second homes, rentals, and investment property count on both forms. The practical takeaway: don't assume your home wealth disqualifies you from federal aid, but do read the CSS schools' policies, since two students with identical FAFSAs can get very different offers from a public versus a private school. Each college's net price calculator reflects its own treatment of home equity.