Paying off student loans with home equity

Start by sorting your loans. Federal student loans come from the government. Private student loans come from banks and other lenders. They work very differently, and that difference drives this decision.

Your federal loan servicer and your credit report can help you see which loans you have. Many borrowers have a mix of both, and you don't have to treat them the same way. You might keep federal loans where they are and look at home equity only for the private ones.

• Income-driven repayment plans that adjust your payment to your income
• Deferment and forbearance if you lose your job or go back to school
• Forgiveness programs, such as Public Service Loan Forgiveness, if you qualify
• Discharge in certain cases, such as death or permanent disability

Private student loans often have fewer of those protections. If yours carry a high or variable rate, a fixed-rate home equity loan may lower your rate and give you one steady payment.

If a parent or relative co-signed a private loan, paying it off also removes them from the debt. For many families, that matters as much as the savings.

Student loans don't put your home at risk. A home equity loan does. If your income drops, you won't have income-driven options, and a missed payment could lead to foreclosure.

Term matters too. Moving a loan you'd clear in a few years into a 20- or 30-year loan could mean more interest overall. If you go ahead, a shorter term or extra payments can keep the total cost down.

You may be able to deduct some student loan interest, depending on your income. Interest on a home equity loan used to pay off student loans usually isn't deductible. Talk with a tax professional before you switch.

CapCenter offers fixed-rate home equity loans from $50,000 to $250,000, with 15-, 20- and 30-year terms and ZERO Closing Costs (restrictions apply; see Offer details). A loan consultant can help you compare your current payments with a new loan side by side.