Paying for School - Private Loans or Home Equity Line of Credit

  1. Hello All,

    I've just received notice that I've been accepted to Broward Community College's AS in Nursing Program. This is my second career and with the federal loans I borrowed to pay for my bachelor's and master's coursework, I have exceed my school's loan limit of $14000.

    My estimated tuition/fees is about $6000, which I may be able to get covered with a hospital scholarship. My primary concern is my living expenses (mortgage, car payment, HEALTH INSURANCE etc.), which will total about $43000 for the 22 months (20 months to complete the program and 2 months cushion).

    I have some money in savings and since my background is in education, I plan to substitute teach and tutor to make a little extra money. However, I'll still be short.

    I'm weighing my options between taking a Private Education Loan or a Home Equity Loan?!?!?

    Sorry if I gave To Much Information, but I'm really struggling with this decision.

    What do you think?
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  2. 9 Comments

  3. by   np_wannabe
    Hello! Congratulations on your acceptance! :-)

    I would probably do an education loan (i have used stafford, but my husband went through nelnet...i can't remember which bank that is, but it's nelnet.net).

    I would choose education loan because you'll be able to defer your first payment until after you graduate, whereas with a HELOC, you'll have to pay that while you're in school. Plus, if you really want to keep your expenses low, you'd probably end up with a variable interest rate on your home equity loan--your monthly payments would be low, but who knows what kind of an interest rate you'll be paying 22 months from now.

    My sister just graduated from BCC in August. Great program. Good luck with your decision in paying for school...I'm still paying for my grad school loans 10 years later, so I know what you're talkin' about!!
    Last edit by np_wannabe on Oct 26, '07
  4. by   SuesquatchRN
    Home Equity. You can write off the enormous interest.
  5. by   np_wannabe
    Quote from Suesquatch
    Home Equity. You can write off the enormous interest.
    VERY good point....hadn't thought about that.....
  6. by   LeavingTeaching4RN
    Quote from Suesquatch
    Home Equity. You can write off the enormous interest.
    Thanks for your suggestion.
    I've considered the tax benefit of using the HELOC. I'm hoping to pay out of pocket for the first 2 or 3 out of 5 semesters. What makes me nervous about this option is I'll have to began to make payments immediately (I believe.). This means that each time I borrow money, I'll have to borrow more to pay the HELOC payments.
  7. by   SuesquatchRN
    Quote from LeavingTeaching4RN
    What makes me nervous about this option is I'll have to began to make payments immediately (I believe.).
    This, I don't know. Do you have an accountant? Decisions like this are worth popping a hundred or so for a consultaton with someone who has a better clue than we do.
  8. by   LeavingTeaching4RN
    Quote from Suesquatch
    This, I don't know. Do you have an accountant? Decisions like this are worth popping a hundred or so for a consultaton with someone who has a better clue than we do.

    You're right, but I'm trying to save every penny before becoming unemployed and broke.
  9. by   np_wannabe
    Quote from Suesquatch
    This, I don't know. Do you have an accountant? Decisions like this are worth popping a hundred or so for a consultaton with someone who has a better clue than we do.

    I took out a HELOC a couple of years ago and had to make my first payment the very next month. My lender was able to give me all of my options in terms of how much my payments would be and for how many months.

    I used USAA for mine, and was able to do everything over the phone. They asked me a bunch of questions for about 20 minutes, ran my credit report at that time, and asked me how much i wanted to borrow. They fed ex'ed a package to me to sign and send back. You have to be a member of USAA, so if you don't use them, maybe you have something at your local bank or credit union you could check out before you even contact an accountant.....just a thought.
  10. by   pirap
    Are you really serious about borrowing $43000 just to complete an Associate Degree program to pay for all your expenses? If you have never heard of Dave Ramsey you need to tune into his talk radio show, visit his website or check out one his VERY helpful books from the library.

    My advice is probably nothing you want to hear but for your financial future I will give it to you. You never borrow against your house for anything-NOTHING. If you cannot afford the payment while you are in school then you need to sell the house and rent. Don't let anyone sell you crap about writing the interest off. You are borrowing a whole lot of money just to avoid paying a fraction of taxes to the government. In reality you don't really save anything..you just live month to month and pray your roof doesn't blow off and Mr. Insurance tells you they ain't covering it or your heating/air unit goes out and you freeze to death in the winter. In an apartment something breaks, leaks or stops working THEY FIX IT. Private loans will cost you big time unless you borrow from a reputable bank or credit union in which you have a good relationship with--you know one you can stroll into and actually sit down and talk to a person not just an idiot in a box on the phone 3000 miles away. Interest rates are usually higher and can go up over the life of the loan.

    Can you put off the program for one year while you work your butt off saving money? If going into nursing is this important to you can you sell your house and use the profit to help with expenses? A house is just brick and wood..a home is a feeling and that can be experienced anywhere--even an apartment. Are you trying to quit work all together? Is that really necessary? Like me, you have several degrees so you have what it takes to "make it" in college. If you owe a lot of money on your car just sell it..you may eat the difference but its better than owing $20000 on something that sinks in value. I drove a 17 year old Ford 100+miles round trip everyday to nursing school. Ugliest piece of crap but hey it was PAID FOR.

    Anyway..I beg you not to jump off the deep end and go into immense debt. There are ways to do this and come out owing nothing or very little. DAVE RAMSEY. Our family is living like NO ONE ELSE(no credit cards and debt-free except house and a stupid school loan and we are working hard to pay off) so one day we can live LIKE NO ONE ELSE---DEBT FREE!!!!!

    Good luck!!!!!!!
    Last edit by pirap on Oct 26, '07
  11. by   LeavingTeaching4RN
    Quote from pirap
    Are you really serious about borrowing $43000 just to complete an Associate Degree program to pay for all your expenses? If you have never heard of Dave Ramsey you need to tune into his talk radio show, visit his website or check out one his VERY helpful books from the library.

    My advice is probably nothing you want to hear but for your financial future I will give it to you. You never borrow against your house for anything-NOTHING. If you cannot afford the payment while you are in school then you need to sell the house and rent. Don't let anyone sell you crap about writing the interest off. You are borrowing a whole lot of money just to avoid paying a fraction of taxes to the government. In reality you don't really save anything..you just live month to month and pray your roof doesn't blow off and Mr. Insurance tells you they ain't covering it or your heating/air unit goes out and you freeze to death in the winter. In an apartment something breaks, leaks or stops working THEY FIX IT. Private loans will cost you big time unless you borrow from a reputable bank or credit union in which you have a good relationship with--you know one you can stroll into and actually sit down and talk to a person not just an idiot in a box on the phone 3000 miles away. Interest rates are usually higher and can go up over the life of the loan.

    Can you put off the program for one year while you work your butt off saving money? If going into nursing is this important to you can you sell your house and use the profit to help with expenses? A house is just brick and wood..a home is a feeling and that can be experienced anywhere--even an apartment. Are you trying to quit work all together? Is that really necessary? Like me, you have several degrees so you have what it takes to "make it" in college. If you owe a lot of money on your car just sell it..you may eat the difference but its better than owing $20000 on something that sinks in value. I drove a 17 year old Ford 100+miles round trip everyday to nursing school. Ugliest piece of crap but hey it was PAID FOR.

    Anyway..I beg you not to jump off the deep end and go into immense debt. There are ways to do this and come out owing nothing or very little. DAVE RAMSEY. Our family is living like NO ONE ELSE(no credit cards and debt-free except house and a stupid school loan and we are working hard to pay off) so one day we can live LIKE NO ONE ELSE---DEBT FREE!!!!!

    Good luck!!!!!!!
    No, I'm not considering borrowing $43000. This is my estimate of how much money it would take to maintain a sensible standard of living and pay for school. I plan to borrow between $10000 - $20000 worst case scenario.

    I know that borrowing against my home is dangerous. This may sound silly, but I would not borrow more in student loans or in a HELOC than I could transfer to a credit card (preferably at 0% or at prime), if trouble arose. Simply because student loans can not be forgiven and if I default on the HELOC, I could lose my home. These consequences aren't true for credit card debt (which I don't have now.)

    Unfortunately, if I sold my home, my living expenses would actually increase because the cost of rent in South Florida is ridiculous. I purchased my home before the market increased. Therefore, my mortgage is much lower than what I would pay to rent an apartment.

    I don't owe much on my car. Looked into selling it and paying cash for something else but again, I bought the car when the interest rate was really low. So, this wouldn't help either.

    Health insurance is the real stickler for me, where as COBRA will cost me about $500 a month and I need good coverage, since I have some pre-existing conditions.

    I'm not trying to quit working but my program schedule doesn't allow me to maintain full time employment. I do plan to substitute teach, tutor, and continue my employment as a summer school teacher, which pays decent.

    Thanks for your input and time. I can see that your response was well thought out. I'm trying not to jump into the deep in!

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