The cost of higher education continues to rise annually. While there are a multitude of options out there to fund this sizable expense, one that you may not have considered is a line of credit.
For the first time since 2007, we are seeing home prices returning to pre-recession levels, and that is good news for your child’s higher education. Let’s look at the benefits and risks of using your home as a line of credit:
Lower Rate, Less Interest
When compared to student loans, or even to other types of personal loans, a home equity line of credit will usually have a much lower interest rate, according to U.S. News. This results in paying less in interest and funding a college education for less overall.
Potential Tax Benefit
In some instances, the interest on a home equity line of credit is tax deductible. However, it is important to discuss this with your tax adviser before making a decision.
Your Home is Your Collateral
When you use your home as a line of credit, your home is your collateral. What does this mean? Should something go wrong with your loan, or if your circumstances change and you cannot make the payments, your home will then be at risk.
You May Put Financial Aid at Stake
In some instances, the federal government or college of choice may count the use of your home as a line of credit as income when calculating your expected family contribution on your FAFSA. Be aware of the specific requirements for the colleges where your child is applying.
Get smarter about paying for higher education; check out the benefits of a BancorpSouth home equity line of credit. Click here, or call us at (888) 797-7711.
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