I have a lot of school loans from my two children. I keep getting letters to consolidate them. Some one was telling my husband to take out a home equity loan to pay them off as then we could write off the interest on the home equity loan. Any opinions on that? Any suggestions about consolidating them with the Sallie Mae company where they were taken out? I need to do something before the interest rate goes up again. I am just not sure what all the options are or which way to go.
I have a lot of experience with school loans.
First of all, don’t use a home equity loan to pay these. Here are the reasons:
- You can deduct student loan interest on your taxes (I do it every year). I’m not sure if you can deduct it unless it’s for you or a dependent on your taxes. (Check with a tax advisor on this)
- If the person responsible for the student loan dies, the loan is forgiven, and no one will need to pay it.
- Congress is working to reduce student loan rates, and there is a good possibility of that happening.
- You don’t want to tie up the equity in your house for this. There may also be loan origination fees for an equity loan, and other hidden costs. There is info on the internet about this.
- You can consolidate the student loans for each student with your lender or another lender, and make sure it’s set up with a fixed rate, if that is the route you choose.
Hope this helps. And the main reason to not take a home equity loan for school loans is
this: Why would you put your home at risk????