Some parents believe that paying for a kid to go to college is a good reason to take out a HELOC. But, almost all experts agree that people should use extreme caution when using a home equity line of credit to fund tuition expenses.

CNBC On the Money expert Carmen Wong Ulrich explains:

“Whether it’s taking all the equity out of your home with a HELOC or second mortgage or putting all the student loans in your name, I want to hold the pen of every parent about to jeopardize their future and say, ‘Who’s going to take care of you?’

…Too many parents are risking their own retirements to get the next generation an education.”

Although using HELOC to fund short term schooling needs may be necessary, so many alternatives are available for today’s students. Federal loan programs make it possible for students to borrow money at rates typically much lower than parents will pay for their HELOC loans. After finishing graduate school, my own student loan was fixed at less than 3.5%. Plus, it offers programs to reduce the rate if I have financial problems or choose to return to school. Try finding a HELOC with those features!

See Also:

Is a HELOC Right for You?

Answers to Common HELOC Questions

Tags | Heloc, home equity line of credit, paying for college, student loans, tuition