My good (nonphysician) friend told me today that he is stilling paying off the debt from his child's college expenses, via a HELOC. (His son graduated about 5 years ago.)
I am not a big fan of using the HELOC to pay for college. If money must be borrowed to pay for education, I believe it should be on the student, who has a lifetime to pay it back. If the parents have the ability and want to make the loan payments, great. If something happens to the parents' earning ability, the son can assume the payments. With the HELOC, if something happens to the parents' earning ability, they could potentially lose the house. I understand that the interest may be deductible, but is it worth the risk? Or am I too cautious? What am I missing here?
I am not a big fan of using the HELOC to pay for college. If money must be borrowed to pay for education, I believe it should be on the student, who has a lifetime to pay it back. If the parents have the ability and want to make the loan payments, great. If something happens to the parents' earning ability, the son can assume the payments. With the HELOC, if something happens to the parents' earning ability, they could potentially lose the house. I understand that the interest may be deductible, but is it worth the risk? Or am I too cautious? What am I missing here?
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