<p>Right now I need 15K to go to the college I want to attend.</p>
<p>Right now my parents can only afford 5K - 6K.</p>
<p>Our house right now is worth about $500,000.</p>
<p>Would it be a good idea to use a Home Equity Loan?</p>
<p>Right now I've been pounding out job applications (20 in the past 2 weeks) and hopefully I'll get a job soon.</p>
<p>But yeah would getting a HEL be a good idea?</p>
<p>(Sorry for asking but my parents are immigrants and I'm a first generation college student!)</p>
<p>It depends on many factors. Foremost, what do they have saved for retirement? Our house is worth 525K but we have very limited retirement funds so we told our son we would not likely use the house for paying college bills. Many parents, however, do.</p>
<p>PS–What is your FA package? Our son has summer earnings (pretty big because minimum wage is high in DC and he may also have a paid internship this summer) and work study. Is that 15K after summer and campus earnings and a student loan?</p>
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<p>That is totally up to your parents. A home equity loan would be in THEIR name. Some folks do not want to use home equity loans for other purposes than home related things. Your parents would have to agree that this is something THEY want to do.</p>
<p>Lots of people use home equity to help pay for college. Some considerations: Is there a conventional mortgage also? Would they be able to handle the additional payments? How much equity do they have? Are you aware that HELOC lenders can shut down lines of credit and/or foreclose even if you have never missed a payment? What would happen in the event of job loss? If they had to sell the house, how difficult would that be and would they actually get $500K for it in a reasonable time frame? What are their long term plans regarding the house?</p>
<p>If you have $10K to cover, can you help by saving $1500 or so over the summer and by taking out a Stafford loan, and by getting a part-time on campus job, say 10 hours per week at $8/hr ($400 per month)? Are there any local scholarships you can apply for? Our HS has a bunch of $1000 scholarships from groups like the Lions. Every bit helps.</p>
<p>If all of that still doesn’t cover the gap, your parents could consider a small HELOC–if they can afford it.</p>
<p>Okay here’s my situation now. </p>
<p>The school I want to attend is 50K a year.</p>
<p>With grants they’re giving me, the Sub and Unsub Stafford Loans I’m getting (3.5K and 2K respectively), the work study (1K), and the Perkins Loan (1K) that totals to be about 36K.</p>
<p>So I need to ind about 14K, estimated. </p>
<p>Right now my parents can only help out 5K - 6K so that leaves me with the job o finding about 8K-9K. </p>
<p>I’m looking for jobs right now and hopefully by the time school starts I’ll have about 3K - 4K, which leaves about 5K - 6K left from somewhere. That amount my parents are thinking about getting for a HEL.</p>
<p>Hopefully after explaining it, it makes more sense.</p>
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<p>OK…what am I missing. Your total aid is $6500 in loans and $1000 in work study. Subtract that from $50K and you get a balance to pay of $42500. </p>
<p>Let’s use the LARGE number for your parent contribution…and subract another $6000…leaving a balance to fund of $36,500.</p>
<p>Are you expecting your parents to take an home equity (or some other) loan in the amount of $36500 a year? That is a LOT of loan debt for them to assume. </p>
<p>It would be one thing if your parents were able and willing to contribute a significant amount of that $42,500…but they are only willing to contribute $6000 and you hope they will take out a $36,500 a year loan? Sorry…that just sounds very unreasonable to ME…but truthfully, it’s up to your PARENTS. </p>
<p>In my opinion…that is too much debt to assume. I hope you have less expensive college options from which to choose.</p>
<p>I think he said with GRANTS and the loans he is getting 36K</p>
<p>OP…how much in GRANT money are you receiving?</p>
<p>Hahah yeah WITH grants it’s 36K a year.</p>
<p>I’m getting 28K in grants for a year.</p>
<p>ok…so total aid is $28K in grants, $5500 in stafford loans, $1000 in WS, $1000 in perkins loan.</p>
<p>That leaves you with having to get $14500 in additional loans. That’s better. If you work in the summer even mowing lawns or babysitting, you should be able to earn at least $1000. Your parents can contribute $6K…so your shortfall would be $7500…right?</p>
<p>Ask your PARENTS if they are willing to take out a loan in THEIR name for that $7500…HELOC or Parent Plus. The decision is up to them.</p>
<p>Well last year during the summer I made about 3K, so I’m hoping to make that much this year again.</p>
<p>Mr. California…the other thing you need to look at is the billable costs…in other words what is billed from the bursar’s office. This typically includes tuition/room/board/fees. Most schools require health insurance but some will waive that fee IF your family carries you on a plan that has certain requirements. That saves US $1500 per year. Books are not billed by the university…our kids bought them online…used. DD actually rented a text for one course and saved money there too. Ditto personal expenses…and the like.</p>
<p>If your parents can only afford to give you $5k - $6k, how will they be able to afford to give you that if they are ALSO having to pay for the home equity line? Do you realize that they will be making payments on this WHILE also trying to come up with the $5k -6k per year. And, will they be borrowing a semester at a time, a year at a time, or what? What will happen if they lose their job and can’t borrow anymore for your future years?</p>
<p>BTW…are your parents going to be responsible for paying this loan or are you?</p>
<p>. </p>
<p>*Okay so my financial aid for this school just came in…but what does this mean…here’s what it looks like.</p>
<p>University Grant: Fall - 14,250 Spring - 14250 Total - 28,500
Perkins Loan: Fall - 500 Spring - 500 Total - 1,000
Work Study: Fall - 500 Spring - 500 Total 1,000
Sub Stafford Loan: Fall - 1,750 Spring - 1,750 Total - 3,500
Unsub Stafford Loan: Fall - 1,000 Spring - 1,000 Total - 2,000</p>
<p>Total for fall - 18,000
Total for spring - 18,000
Total for total - 36,000</p>
<p>**And wait, do I pay my four years of loans AFTER I graduate or how does that work?</p>
<p>Because I’m going to pay for the loans and such after I graduate…my parents really don’t need that. **</p>
<p>*</p>
<p>You posted the above on another thread. You can’t pay a home equity line of credit AFTER you graduate. You have to begin paying IMMEDIATELY…which means YOUR PARENTS would be paying, not you.</p>
<p>What school is this? What other packages have you received? </p>
<p>What is your likely major and likely career?</p>
<p>This is basically how my parents laid it out for me.</p>
<p>Right now they have an EXTRA 5K - 6K to help me out for college. The HEL will be money from basically going to the movies less, eating out less, etc. This money should also come from the fact that I won’t be living at home. I play basketball and baseball so I shower twice a day, basically 90% of the laundry every week is my clothes…etc.</p>
<p>So THAT money that they’ll try to save will go to the HEL.</p>
<p>The Stafford and Perkins loan will be paid by me AFTER I graduate.</p>
<p>So, are you saying that THEY will be 100% responsible for paying back the HEL money? </p>
<p>What school is this? What other schools have you been accepted to?</p>
<p>Yeah, they’ll be paying the HEL 100%.</p>
<p>And Villanova as a business major.</p>
<p>I always think it is wrong to just focus on one year. You have 4 years of school and if the gap is $15000 now, it will be about $60-65000 in 4 years. Yes, you can work during the school year, work during summers, be more frugal than the COA, but you are still still taking of about $50,000 assuming that your aid figures do not change. In addition to that you have $5500 in loans which will be $22,000 over 4 years. Also, will your parents be able to contribute $6000 a year for the next three years?</p>
<p>You have said your house is worth $500000, but what is your parents equity in the house, in other words how much can they borrow against HELOC? Normally the limits are about 85-90%. If you can get an Home equity loan for say $50,000, then that would be the best bet for you as Home equity loans are now cheaper than other loans, but it depends on what the credit ratings for your parents are, what there income levels are etc.</p>
<p>So talk to different lenders, talk to the school for student loans etc., keep in mind that you need to plan for 4 years. Also, if you have other options, consider them. May be another option you have makes more financial sense. Think about all your options, not just this year.</p>
<p>Practically speaking, HELOCs are very difficult to get these days. As others have said, it will depend on how much equity is in your home (might be less than you think due to housing market being depressed) and credit score. But aside from that banks are doing everything they can to close those LOCs. I had one on my home which has ~400K equity and a credit score of 840 and the bank still used a loophole to close my account. I called and wrote numerous letters to no avail. They simply wanted it off their books.</p>