Start with free money and federal aid
Fill out the FAFSA and look for grants and scholarships first, since they don't need to be repaid. Next come federal student loans in the student's name. They offer income-driven repayment, deferment and, in some cases, forgiveness. Those protections are hard to replace.
When home equity can help
If there's still a gap after aid, parents often look at Parent PLUS loans, private student loans or their home's equity. A home equity loan may offer a lower fixed rate than some of those choices, with a predictable monthly payment.
It can also make sense when you need a larger amount at once, such as covering several years of a gap, and you're confident about your income for the length of the loan.
Compare your options
- Federal student loans: income-driven repayment, deferment, in the student's name
- Parent PLUS loans: federal, often at higher rates, with some flexible repayment
- Private student loans: rates vary by credit, fewer protections
- Home equity loan: often a lower fixed rate, but your home secures it
The trade-off
With a home equity loan, the debt is yours, not your student's, and it's secured by your home. If money gets tight, there's no income-based plan or deferment. Missing payments could put your home at risk. Think about your retirement timeline too, since you may still be paying after your student graduates.
A payment example
Hypothetical example. APR may differ; example only. Rates change daily.
A $60,000 home equity loan at 8% for 15 years is about $573 a month. A longer term would lower the payment but raise the total interest.
Example details: $60,000 15-year fixed home equity loan at 8.000% (8.055% APR): 180 monthly payments of $573.39. Principal and interest only; taxes and insurance not included, so the actual payment will be higher. Unless noted, APR assumes ZERO Closing Costs, no discount points and 15 days of prepaid interest. Hypothetical example prepared November 4, 2026, not a current CapCenter rate offer; subject to credit approval.
Taxes and financial aid
Interest on home equity debt is generally deductible only when the money buys, builds or substantially improves the home. Tuition usually doesn't qualify. Talk with a tax professional about your situation.
Home equity in your primary home usually isn't counted on the FAFSA, but some schools ask about it on their own aid forms. Check with the school's financial aid office.
Borrowing with CapCenter
CapCenter offers fixed-rate home equity loans from $50,000 to $250,000, with 15, 20 or 30-year terms, on single-family primary residences and second homes, with ZERO Closing Costs (restrictions apply). You need a credit score of at least 620 for a CapCenter loan.
