Paying fo college
I’m debating using a tax deferred annuity or home equity loan to pay for two kids college this coming school year. Annuity is $50,000 that I don’t need for retirement. But, will have to pay 10% early withdrawal plus taxes. HELOC should be cheaper. What do you think?
Terry Says
First, have you looked into all possible forms of financial aid, scholarships, extra help such as work/study programs at the college — and even the possibility of each living at home and attending a local community college for one year. For sure, your problems aren’t going to end with this first invasion of your savings! You need an overall plan.
Go to studentaid.ed.gov to learn more about Federal student loan programs, as well as parental PLUS loans. (A warning, PLUS loans are very expensive and have additional fees.) Then go to Finaid.org to get an overall picture of how to best finance college. You might find a bit of money at Scholarships.com. At least, scholarships don’t have to be repaid.
It seems a shame to break an annuity and pay a 10 percent penalty. And you know that you cannot deduct interest on a home equity loan. TWO kids in college is a huge burden– and I think you really need to start with some perspective on the overall costs over four years — because this is not a one-time decision. I think after you do some study, you’ll find that a family conference is called for to adjust expectations.
