In the past decade, home equity lines of credit (HELOCs) have become a major source of college tuition funding. If an undergraduate’s parents make too much money or if he is attending a pricey private program, the student may not qualify for competitive federal loans. As an alternative, parents often draw on their home’s equity to pay for the ever-rising cost of tuition.

Since January, it has become significantly more difficult to qualify for a HELOC. The Christian Science Monitor reports:

“Unfortunately, those preparing to write large checks this fall to cover college expenses are faced with an increasingly limited college-loan market. In particular, many must deal with an unexpected tightening of a popular source of college financing: the Home Equity Lines of Credit (HELOC).

Last year, 1 out of 4 parents planned to take out a home-equity loan to help pay for college, according to a survey by Next Step Magazine. College financial-aid offices are expecting this source of financing to grow as high as a third this fall.”

Due to the continuing HELOC freeze, many current borrowers may lose the ability to withdraw more cash from their HELOC loans. Parents should realize that more HELOC freeze letters are received every month. If you don’t want your access limited, now is the time to make alternative plans.

See Also:

Lenders Sending HELOC Freeze Letters

5 Financially Sound Ways to Use Your HELOC

Tags | Heloc, heloc crisis, home equity line of credit