(Newswire.net — May 15, 2023) — A good education is one of the greatest gifts a parent can give their child. In the early years, you do what you can according to what’s available and what you can afford as regards preschool. Then come the mainstream years when the child makes their way through the system and you try to ensure they do enough work in a world full of distractions, and before you know it, college beckons.
This is where it starts to get serious because every young person must enter the job market at some point and that is increasingly ruled by the ogre of qualifications. It may seem as if university degrees have been devalued because everyone has one these days, but that is more reason to make sure your child has one too: those certificates provide proof of ability and perseverance. Having accepted that college is the way forward, there comes the thorny issue of paying for it because college fees can be hefty and few families have the ability to plan for long term wealth while also shelling out thousands of extra dollars each semester.
It can be a daunting prospect, but there are options that enable kids all over to take this crucial step. The sensible place to start is by looking at grants and scholarships which may be available to your child, to cover part or all the tuition fees. Then there’s the student loan, which can be regarded as a necessary evil, in that it will do the job but also saddle the young person with considerable debt when they finally get out there in the working world.
HELOC to the Rescue
One option which takes the burden off the youngster is for a home-owning parent to take out a home equity line of credit, or HELOC to pay for college. If you’ve been paying a mortgage all these years, you are accustomed to that regular monthly expense, and as your income has grown, maybe the payments have become easier. With a HELOC, you’ll be using the same financial mechanism, and you’ll get a favorable rate because, with a home as collateral, lenders regard this as relatively low risk. Although a HELOC can be seen as nothing more or less than a second mortgage, it typically involves smaller amounts of borrowing and therefore lower repayments. Whichever way you look at it, it’s a possible solution to an issue that must be addressed, and you are probably better equipped to deal with it than your child would be if left to their own devices.
Having said that, this is an important stage for a young person, and it’s a perfect opportunity to get them thinking in an adult way about responsibilities and the need to build a good credit rating by doing things properly. By their mid-teens, they should have a bank account and, most parents would agree, a part-time job of some sort, after school or in the summer. It is good for them to mix with other people and get a taste of the adult world, using only a portion of their new income to fund their social life and buy clothes, etc., while most of it stays in the bank, to be used wisely during their college years. There is considerable self-respect to be gained by having a resource they have provided for themselves, in addition to developing the idea that money doesn’t grow on trees, and they must keep replenishing the fund by working when they have time to do so.
Meanwhile, the Bank of Mom and Dad is providing the platform they need, and don’t be afraid to make them aware of this right from the start. Teenagers are not famed for their understanding of such things as they are more likely to see it as their right, and that you are simply doing what any parent should do. There is an element of truth in that, but the younger generation needs to know they may well be in that position themselves in due course. Your relationship with your child will dictate how you frame this idea, but it is important for them to realize you are making a financial sacrifice out of love.
Rates vary considerably, so if you intend to use a HELOC to pay for college, it is advisable to shop around for rates that suit your needs. You might even want to enlist your child’s help with this because the internet is the territory they have grown up in and they are probably better than you are at finding things. Now they can begin to see the net as a business tool as much as a playground, and that must be a good thing. With your stipulations as to what to look for in terms of interest rates and so on, it could be a great learning experience for them.