Financial Answer Center
Parental Loans for Learning

Home Equity Line of Credit

You can establish a home equity line of credit, based on your home's appraised market value minus any unpaid mortgage and then borrow a percentage of the home's equity. You may wish to set up this line of credit in advance and then borrow as needed for each year of college.

IMPORTANT NOTE: Remember that the cash you have on hand or in a bank account is counted as an asset when schools determine your child's eligibility for federal need-based financial aid; however, the equity in your home is not. Therefore, establish the credit line, but don't withdraw the funds until after you receive a financial aid determination

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