Create SLLC for FAFSA?

[Susan Michael]

Hello, and thanks for reading. We have a Junior in high school (only child), and this coming October will fill out the FAFSA for the first time. My husband has a W-2 job and owns 2 residential single-family properties, one in Illinois and one in Florida. On our taxes, he is the sole income for our family but we file jointly.

I have some conflicting information about getting those properties into a Series LLC. The owner of a "college coaching" service said yes, absolutely, right now, get those properties into a Series LLC, and our real estate attorney did as well. Our real estate attorney has filled out the FAFSA 9 times in recent years but does not own rental property. Our accountant, however, said do not bother as the equity in the two properties (roughly $600k) will still be seen as passive and will be reported on the FAFSA anyway since we do not provide a service of some kind to classify it as a small business. This equity, while great, is completely sinking us for any kind of need-based aid. One property has a $67K mortgage and the other is owned outright. I talked with the mortgage company, and we qualify to move it into the SLLC without too much trouble (no due upon sale clause in this case).

The answer is not to sell a property to pay for college, as this is our main retirement source. We are not wealthy by any stretch of the imagination and definitely cannot afford what is being presented on schools' net calculators. We obviously do not want our daughter strapped with $200K+ in student loans either. Can anyone share some insight?