How to Use a Line of Credit to Pay for Education

Using a Line of Credit for Education

When it comes to using home equity to pay for education, a line of credit can be a good choice. Its flexibility means you can pay for expenses as needed, rather than just getting a lump sum and then discovering you need to apply for another loan to make it work.

However, it’s important to be careful before getting a line of credit to pay for education. In many cases, education loans are unsecured, so using your home as security could cause problems down the road. If you can’t make payments, you could lose the house.

Additionally, there might be other ways to pay some of the costs associated with education. Consider using the RESP to save up ahead of time. You can also apply for government grants and try for scholarships. However, even with all of this, you could still end up with a college funding gap. In that case, it makes sense to turn to a home equity line of credit.

Because the loan is secured by your home, you might be able to get a better interest rate. Plus, the revolving nature of the loan makes it easy to pay for books when needed, or pay for other costs, like housing. The flexibility of a line of credit can also help you cover expenses toward the beginning, but then encourage your child to apply for other funding for later years at university.

With a line of credit, you have more options, and access to a pool of capital that can help you move forward with what you need — including unexpected school expenses. It might even be able to help pay for a valuable semester abroad experience.

While any loan shouldn’t be taken lightly, the reality is that your home is a valuable asset, and it can be factored into your future financial plans, including education.