<p>vballmom, that’s exactly what has happened to many people I know - their lines have been shut down. That’s why in post #5 above I mentioned that if you have a line available, you might want to access that cash now and just stash it away.</p>
<p>FWIW when I inquired about a HELOC for a client of mine, the bank said they would look into reopening it if the borrower sent tax forms and paid for a new appraisal. This was a no-doc HELOC at its inception but the bank is essentially converting it to full doc. Translation: they don’t want to lend.</p>
<p>So again, if you can get a HELOC now or if you have access to HELOC funds at the prime rate, you might want to consider taking the cash out and putting it into a very safe bond fund. If we double-dip in this recession, credit will dry up fast.</p>
<p>Taping the HELOC at 3.25% and placing that money in some other investment vehicle sounds attractive but if you want to lock the loan to protect against inflation you don’t get a 3.25% lock… more like 5.5%. I’ve thought about paying tuition in advance as a hedge against inflation. My D school lets’s you pay tuition two years in advance. Might be a good hedge as college prices seem to increase 5-8% a year. What do you think?</p>
<p>^ I say go ahead and pay the two years. Tuition jumped big time last year at both of my D’s universities. Just “read the fine print” to make sure there are not gotcha’s in the future year payment … you know, something like future year payments being only 90% refundable if the student chooses not to attend.</p>
<p>"He said he’s not interested in making any money from his lawsuit, but just hopes to make a point. “Bottom line, they weren’t willing to listen or look at any of the facts,” he said. “I feel we were wronged.” "</p>
<p>It seems pretty clear that banks are pretty much out of control at the moment. Whether it’s unilaterally closing credit lines, or dragging their feet on foreclosure work-outs, or raising credit card interest rates (JPM raised mine from 6.9% fixed to 27.99% variable), or “mischaracterizing” $5.8B employee payments in proxy materials, or having senior bank managers host parties in foreclosed mansions, you gotta wonder who’s minding the store.</p>
<p>Don’t forget the $35 fee BOA charges for each time you overchage on your debit card. My bank charges my D $5. She got bit a couple times and now knows better. But… $35 a whack with no prior notice other than the fine print! An error in subtraction can cost you $350 in a matter of days. NBC just did a blurb on it on the nightly news. BOA said the soldier they did it to, for $1750, was reimbursed in full … yeah … since he got on the news. Abject greed.</p>
<p>On rising interest rates, Financial Institutions will be reluctant to fix the cost of a loan, especially to refinance a variable loan. A lot of home owners with no-docs and 3/1, 5/1 loans thought they could refinance on the assurance of their broker and loan officers.</p>
<p>My belief is that, despite parents best intentions, they saddle themselves with inordinate amounts of debt to send their little ones to whichever college they can. This causes so many parents to risk their own financial situation - as one might do by taking out a line of equity in this market- and ultimately puts the parents in a sorry state. Your child is, presumably young, capable and has many years of work before them. Meanwhile, you have to retire at some point. If you’re risking your future to give your child this gift and end up having needs in retirement which you cannot meet, your child will ultimately bear the burden. Wouldn’t it be better for the child to work/take out their own loans/go to a CC where they can actually have a stake in their education? If parents can flat out afford college; great! But what better lesson to teach than taking financial responsibility for one’s self and offering your child the gift of both your own secure future and teaching them to have a stake in their own education?</p>
<p>I think parents who can afford to pay do so. I don’t think there are a lot of parents out there who ham-string themselves for their kid’s education. I think there are a greater number of parents who unwittingly deny their kids a top flight education because the parents can’t be bothered examining the situation more closely. I’ve known people with dual six figure incomes who tell their kids they can’t afford a four year private college. Meanwhile these parents are maxing out every IRA, have second homes, and vacation in the Carib. every other year. I also think these parents know in their heart they could do more, but are conveniently ignorant. A coworker of mine told his D she could only apply to three state schools because the application fees were two expensive. Meanwhile he bought a 20K boat. This is not 1965 when your kid could get an affordable education at a private school and take on the debt load him or herself. I work with young people who have 120K college loans to pay off. Knowing I had the means and staying power to provide my child an education they are worthy of and not doing so would be far more onerous they giving up a few vacations or a new vehicle every three years. Don’t get me wrong I’ve got nothing against CC’s I graduated from one myself. They are a great option at an incredibly affordable price. I just think if you as a parent can do better by your child …you should.</p>
<p>Well put Nightingale. If you bring the children into the world you should do the best you can to give them the advantage of a college education. And for many this should mean saving for their college.</p>