<p>Just saw this thread for the first time. DH and I are COUNTING on a HELOC to finish funding DS’s college and in the future pay for part of DD’s. I have not heard of any HELOC’s being frozen here in New England… and the banks are still advertising that they’re offering them. We have one more semester’s tuition payment (fall 09) before we’ll need the HELOC, so we weren’t going to open one yet, but now I feel like maybe we should go ahead and get the application rolling. So far as I know home prices are down 10 - 20% here, but we bought our house in 1993 and have not re-financed, so we only owe about 25 - 30% of the house’s value, depending what that value actually is.</p>
<p>Sounds like you’re going to be OK, Lafalum.</p>
<p>It seems the banks are now running scared and trying to reduce their exposure as much as possible. Any little thing sets them off. Now they are being prudent and basically ruining many good customers. This is also going on with credit card lines, even if you have paid your balances loyally. This is mainly the major banks who were bailed out with our tax money, which now sits on their balance sheets. It makes me really angry. I wish the government would be more proactive about this. I hope they realize that they are weaning people off credit and in a couple of years, hopefully, people will have learned to not rely on them. What will they do then? Recently, I had three unexpected household emergencies that required large repair payments. The heloc came in handy. Now, I think I will just spend less and start setting aside a cash reserve the good old fashioned way.</p>
<p>I heard class action suits are forming.</p>
<p>JiffsMom Case-Shiller lumps you with all of Chicago so declines elsewhere hurt you. And WaMu and Countrywide died for a reason. Citbank is on life support. Chase is in intensive care.</p>
<p>I kept passing over this thread because it didn’t pertain to our situation. Our S will be graduating in 2010 and we’ve prepared as best as we can for college expenses. However, our D will be following in 2012 and there will be an overlap of 2 yrs. Well, yesterday, we received a letter from Wells Fargo that our 200K HELOC was going to be reduced by 100K. While it isn’t a crisis for us because we don’t need the money right now, it sure eliminates one option that we would’ve had. We’re still thinking about appealing, but is it worth it at this point…</p>
<p>I,too, kept passing over this thread because , frankly, I don’t understand what is the problem. Since I don’t know much about the subject, what I said here may be upsetting to some. So, I apologize in advance.</p>
<p>What I don’t understand, is why do people need to borrow a large sum of $$ to pay for college? There are many on CC who is loaded so they pay full price. There are some on CC who are not loaded like me who get need based aids. </p>
<p>I do understand sometimes there is a gap. But that is those perkins or stafford loans are for, isn’t it?</p>
<p>DadII, your credibility on financial matters in the negative numbers. There’s a huge number of people who fall between “loaded” and Perkins loan qualifications. Not everyone has been able to get the deal you got.</p>
<p>DadII, Depending on where our children choose to go, we may be affected. We set up the HELOC as a safety net for unexpected expenses. For example, our rental in San Diego had a broken water pipe that cost us $10k in repairs and insurance wouldn’t cover it all. Not to mention lost rental income. Its not that we (or other posters) have planned to finance our kids educations entirely w/HELOCS, its the idea that we couldn’t if we WANTED to. Just as our 529’s have been hit. Yes, for now, student loans are available but for how long?<br>
For once, procrastination served us well. Last spring, we closed an investment account to roll it over into a 529 for our youngest who’s 6. We were so busy that the $$ sat in the bank for 3 months. The market started to falter and had we not cashed in that account, it would’ve been worth half of what we have today. Dumb Luck.</p>
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<p>Perkins loans have an “exceptional need” component. Not useful for middle or upper middle class.</p>
<p>Unsubsidized Stafford loans are available, but are limited to a yearly amount (which changes all the time–I think that it starts at $5500 for freshman year and ratchets up as you go along–$7500 in later years). Many times, the gap is greater than $5500-$7500 per year.</p>
<p>So Stafford and Perkins loans are better than nothing, but may not cover the whole amount needed.</p>
<p>PLUS loans or private loans are available to parents to fill in the remaining gap. It’s at this point that a parent may think about using a HELOC.</p>
<p>Would it be beneficial to get a HELOC for future use in a year or two?</p>
<p>Dad II, some people may use a HELOC to make up some portion of their EFC.</p>
<p>Some people may have income that comes in waves not steady and may use the HELOC to smooth out the bumps</p>
<p>Dad II, some people are neither “loaded” nor do they qualify for a substantial amount of need-based aid. We got some need-based, D got some merit aid, and we still paid $100K over four years divided between current income and loans.</p>
<p>"What I don’t understand, is why do people need to borrow a large sum of $$ to pay for college? There are many on CC who is loaded so they pay full price. There are some on CC who are not loaded like me who get need based aids. "</p>
<p>Do you not understand that Stanford is exceptional in the amount of aid it can provide? And that not everyone gets into a Stanford (or equivalent school)?</p>
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<p>And…Dad II…there are plenty of people on CC who are “not loaded” who do NOT receive need based aid that fully covers the costs of their kids attending college. AND you know…some of us don’t even mind taking out these loans to help our college kids. It’s an investment in their future…and ours. After all…this next generation will be running the world when we’re seniors. I want them to be WELL educated.</p>
<p>We have used savings and a small amount of a HELOC and ONE parent’s full (full time) salary to pay ONLY for college expenses. In this family, BOTH parents work full time at professional well paying jobs…with one salary dedicated to college expenses. And the HELOC has helped us in some “crunch” times when cash flow just wasn’t where it needed to be…because of the college expenses.</p>
<p>I’m not complaining…I have no problem paying for my kids to go to college. None at all. These kids are MY responsibility, not anyone elses. This investment is our decision (both parents).</p>
<p>i took out some loans to pay for my school, but i know my parents contributed a little bit as well. i’m not sure if it came from a home equity loan or where it came from, but I know it wasn’t out of their paychecks. it’s definitely financed from somewhere.</p>
<p>ours has not been frozen (yet)</p>
<p>dragonmom, credibility in the negative numbers, indeed!!</p>
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<p>What I don’t understand is why do people claim to have no money for tuition, expecting their kids’ college expenses to be paid by others, claiming needs-based aid, yet can still buy new cars and take vacations out of the country? (And they claim they are “poor” yet have an income of over $100K!!) There are many on CC who are NOT loaded, DON’T make over $100K, yet still can pay for their kids’ college education because they saved money by not buying new cars, not going on vacation, and not sending their kids to private high schools. (Some people even let their kid choose his/her own college, rather than push the kid to go to the school for which the parents want the decal; what an idea!)</p>
<p>My D2’s private high school has many parents claiming they need help with the tuition. When asked about selling their second home - oh, not in this type of market. What about the summer vacation to France - but that has been planned for months. The pool you are building - contract has been signed, we would lose the deposit.</p>
<p>We have received letters to donate to school’s financial aid to help every student to return. The amount money they are raising is pretty big, considering most students are full pay, there must be a lot of parents out of jobs.</p>
<p>Same thing here… our property taxes are the lowest around, and as a result our schools are crumbling and our accreditation is on warning status, while they debate laying off another 60+ teachers next year. The Town Manager told me he has senior citizens coming into his office saying, “You can’t raise my taxes, I’m on a fixed income!” He has great sympathy for them until they add, “… and my taxes on our house in Florida are half of what I’m paying here!” UGH! Sorry! You own two houses, you support two towns. You don’t wanna pay property taxes, then don’t own two houses.</p>
<p>DH and I are not wealthy. Our house is mid-sized, our cars were bought used, and we vacation with family. We haven’t bought any new furniture in at least 5 years and our kitchen appliances are 15 years old. We get $0 - ZERO - financial aid. And we don’t complain - we saved money to pay for college, and we fully expect to take out a HELOC to pay the rest when the savings run out. We have equity for a HELOC because we bought our house 16 years ago and have not done any cash-out refinances. </p>
<p>So I hope the title of this thread was wrong… I haven’t heard of freezing HELOCs in our neck of the woods, perhaps because property values here haven’t dropped as far as in some other parts of the country.</p>
<p>Lafalum, I wish it weren’t true, but it is. Unfortunately, some of our high limit HELOC’s were based on inflated house values. It is what it is and we’re thankful that we don’t owe more than the value of our house at this point!</p>