Understanding other borrowing options
Some options can include a personal loan, a tuition payment plan, a home equity loan, and a 401(k) retirement plan.
While these are borrowing options that some families choose to help them pay for college, there are some considerations to keep in mind.
- Personal loans can be taken out by parents or students. But remember, loans have to be paid back.
- Tuition payment plans split the annual college bill into equal monthly payments—typically less than 12. Most colleges and universities offer payment plans that allow the family to set up direct debit from a bank account to pay the monthly bills. You don’t have to pay a lump sum
at the beginning of the semester.
- Home equity loans allow a borrower to use the equity of his or her home as collateral. Keep in mind, if a home equity loan isn't repaid, your house can be repossessed.
- 401(k) retirement plans have funds that families might choose to take from to pay for college. Many financial experts don’t recommend this option. You can borrow money for college, but you can’t borrow money for retirement.