1 Paying for College on the House

College is financially challenging as the price of tuition keeps on increasing. Luckily, there are several ways students and parents may consider to support college education. From scholarships to Federal and State Grants to Federal loans and Private student loans, these are options for students who really want to take into the next step of education. Another option, which needs careful thinking is the use of the equity of the home to support finances. Parents may consider using home equity loan if they feel there are no other way to support their children's education.

Taking the equity of the home may be beneficial for the following reasons:

• Getting a fund through the equity might be faster if you have at least 80–85% equity in your home.

• Interest is often tax-deductible.

• Interest rates compared to other types of loans are much more in favor.

• Repayment terms are flexible, with a maximum of 30 years to pay back the loan.

Looking at these advantages, you might consider taking this loan. Perhaps, looking at the downsides would help you create better decision:

• You are taking the equity of your home and you are setting your home as the collateral. There is a tendency you will lose your home once you fail to repay your lender.

• Once payment is delayed or deferred or  forgiven in times of economic downturn, you will probably lose your home.

You may still consider college student loans considering that the interest rate of student loans is pretty reasonable compared with home equity loans. The interest is also tax-deductible up to $ 2,500 per year. Graduates can also get deferrals of up to three years on repayment of their federally guaranteed loans.

With regard to some disadvantages of college student loans, considering the recent news about the rise of student loan debt, you might want to think again.  In fact, according to the Institute for College Access and Success, the average college student graduates with more than $27,000 in loan debt. There are even others who have in excess of $ 50,000 in college debt. Regardless if there is awating job after graduation, most students in debt would not be able to afford comfort and financial stability due to financial crisis. Taking to the next path can be a huge burden with debt issues from the past.

It is better to review both the advantages and drawbacks of other ways to fund college. This will help you create better financial and education decision.