Re @TheGreyKings post, we can take literally this part
" I am not sure what your situation is, " to realise she hasn’t read the thread.
We’re going to be taking the HELOC. Not to pay for private school, but just for the UCs/CSUs our twins will be going to. We have some saved but not enough to cover all 4 years. <> seems silly to ignore the 800K in home equity we have and force our kids to live at home and go to CC or the local CSU that doesn’t have what they want to study.
I wouldn’t take out $40K a year though.
The old saying goes, you can’t borrow for retirement. Those who manage to fund college by robbing Peter to pay Paul (taking limited assets to buy some indulgence,) better have a solid plan how to recoup.
This OP hs nothing saved. How does he/she expect to repay a Helco or PP? The fact some other families remained financially stable or increased earnings or cut back radically to rebuild, is not the path this family seems to be on.
We’ve always prioritized retirement savings – we both started our 401(k) at 22, but prioritizing retirement meant that other savings got back burnered. Again, I wouldn’t do what the OP is suggesting, but I feel confident we can cover the $40 or 50K or whatever we end up taking out on the HELOC in the coming years. Heck, that’s some peoples’ car loans.
Ah…but this poster wants to take out $40,000 per YEAR in HELOC or some kind of loan. That will be $160,000 plus interest…at least $2000 a month in loan payments.
And as noted…the OP has already said he or she has NO savings…so where is that $2000 a month going to come from?
@austinmshauri is right. In state SUNY is a bargain. The total tuition, room and board hovers around 25k with fees. If you can commute, it is possibly free or doable with just the low student loan amount. Most of the SUNYs are great schools, superior to Siena.(sorry Siena).
800K in home equity isn’t typical, SC. I recently looked up the value of the house we owned when we lived in a big city in the Midwest (not Chicago) and we bought it for 90K, sold it for 90K, and 30 years later it just sold again for 115K.
Lovely house, lovely neighborhood, but nobody in that city is looking at 800K in home equity unless it’s one of the very few “Mega mansions” with acreage and multiple structures (pool house, guest house) on the outskirts of town.
Sounds like you guys can comfortably afford the HELOC loan!
Not disputing that a HELOC for that sum and in this case is a bad idea. Just saying a HELOC isn’t always a bad idea. It’s a better deal interest rate wise than a Parent Plus loan.
800K is probably just location based. Frankly this year looks a little scary. I am assuming it isn't even a top California location for a mere 800K, so could be easily touchable by a financial wobble. But some loans for great UCs in state isn't quite the same as borrowing the whole COA for an underwhelming private. I am sure there are plenty of NYS residents whose home equity is 800K too.
Oh yes, we were fortunate to hop on the Bay Area real estate train 20 years ago. I always call it my ill-gotten gains. Even if there is a ‘wobble’ like Sybylla says, we’re just fine. We were just fine in 2008 - 2011 too.
Home equity LOCs aren’t intrinsically evil. We’re using one ourselves for cash flow purposes, and had what we’d borrowed for freshman year paid back by sophomore year.
40k per year, with an unenforceable hope that your kid will help pay it back is insane.
The monthly payment on 160,000 over 10 years, at 4% interest is $1619 per month. For 10 years. And that’s if the interest rate doesn’t go up (it will) and you never need to dip into the LOC for anything else.
Ouch.
I think its definitely not economically sound to borrow that kind of money just for a bachelors degree. I had the same discussion with my DD, who got into her dream school, and then received zero financial aid. She wants to follow with grad school - save the big loans for that if you have to have them at all. Its always hard to have to tell you child no, but this is a learning experience, both for the parents and the children.
Because of reasons outside of our control, I have helped my parents with their bills since high school. I’m 27 and thinking about having a child. Being responsible for my parents puts a bit of a kink in that plan.
With no savings, you’re one bad day from putting your kid in the same situation. Don’t do it. Just don’t. Your kid will thank you.
SUNY schools are fantastic! Siena is so not worth it. It doesn’t offer anything special for that money. It’s not a “name brand” school. Most people even in NY have not heard of it. It’s a very local private school that costs a lot of money for no reason.
Thanks for everyone’s input. Just got back on and read through all the posts. It’s a lot to consider.
Siena was EA. I do want to give my children the gift of a college education , and would prefer that they not have exorbitant loans. To pay it back, it would come out of our salary. We don’t have a whole lot of other debit. And, if something were to happen… well let’s hope not. I’m glad to see that some people do take equity loans. Granted 40k / year is a lot. My child has in-state options, but they were not first choices. We qualify for Excelsior this year (just under the income limit). Next year the income limit increases, so hopefully we’ll still qualify.
If you qualify with income under $100k, then you really can’t afford payments on a $40k loan every year. It’s just too much. Take one of the instate options.
I have a friend who always compares her D’s student loan payment (I think it’s about $300) to a car payment. Well yes, except that it’s for 20 (twenty!!) years. And there is no car! You could have bought 5 cars in that time for the same payment.
SUNYs are fine schools. And free tuition is wonderful! Take advantage of it. I wish PA had a program like Excelsior.
You speak of children, surely your child will understand that you have more than one to put through college.
There is a SUNY for any and everything a student could possibly want to study. I really don’t understand how anyone can just dismiss 60+ schools out of hand.
The Excelsior grant doesn’t pay tuition for private schools. There was talk of giving students $3k/year toward private school tuition if they qualify for the Excelsior, but I don’t know if that was passed.
What does your child want to study, and why can’t they take a gap year? Which SUNYs was s/he accepted to?
Did your child apply to any SUNY schools?