Federal Plus Loan Vs Home Equity Loan

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Federal Plus Loan Vs Home Equity Loan


Apartment Listing  

It is quite popular among Americans to use their home equity loan to pay themselves through college. However, there are others who do not want to put their homes on the line to pay for college and instead have the peace of mind that comes with not have to worry about their mortgage.

In case you are thinking about using the home equity loan to pay for your children's college education instead of availing a Federal Plus loan, you need to consider some facts.

First, many of the home equity loans have higher interest rates than the PLUS loans and hence this might not be an attractive option from the point of view of opportunity costs. Next, the issue of liquidity arises as it is better to have some money available for emergencies and the like instead of spending it all on the college fees. Third, the PLUS loan comes with an insurance guarantee that includes death and disability and hence you are on a sure footing as compared to the home equity loan.

Considering all these factors, it is better to go in for a Federal Plus loan to fund your college rather than a home equity loan. It is better to have some money left over for the children and to determine if you have enough money to cover all the four years of the college education. These benefits make the proposition of using a Federal Plus loan instead of a home equity loan that much more attractive to borrowers who want to pay for college and still have some money left over.

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Federal Plus Loan Vs Home Equity Loan

 
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Federal Plus Loan Vs Home Equity Loan