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Is it better to use a home equity line of credit to pay for my daughters college rather than college loans? |
Is it better to use a home equity line of credit to pay for my daughters college rather than college loans? I would say the college loan is better, if you default on a HELOC well then the bank can take your house away. Your daughter will have time to pay off a college loan after graduation, i believe the interest dies not kick in until that time (the high interest anyway). College loans. Lower interest rate...and she owns the loans. It is not a bad way but if something happens to you and you can't pay back the Equity line they can take your house. If you take out a loan for her and you can't pay it your house won't get taken away. Home equity lines of credit do not have fixed rates so you would be subject to rising interest rates. Do the student loan. She can defer it easily after graduation also, which makes adjustment after college easier. Personally, those college loans need to be in her name! So unless you are going to have her sign some special i.o.u. stuff I wouldn't recommend it. Generally speaking kids do better if they feel the pain of the money being spent! Of course if your daughter is a very money conscious person already (there are a few out there) it's just a question of best interest rates, risk, etc. No, it isn't. Maybe a second mortgage, but not a HELOC for the interest rates. Your daughter should be able to get lower cost loans than you can get. I agree with what another poster said - the loans should be in your daughter's name - she should be responsible for taking them and paying for them. If you want to make arrangements to help her pay off the loans, that's up to you, but if you can not financially afford to pay for her school without risking your own assets, then you don't have a responsibility to send her to school. NO.. let them take out college loans for themselves.. if you get a college loan, and cannot afford to pay it for any period of time, they will let you take a break for about a year if you need to, or lower the monthly payments... home equity loans dont do that...... also they have a lower intrest rate... and don't go on your credit unless u just totally refuse to pay or contact them........ |
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