#43 Using A Reverse Mortgage To Pay Adult Kids’ College Debt
RESCUING ADULT KIDS FROM NEVER-ENDING COLLEGE DEBT
Like many of your friends, you’ve tried to help fund the grandchildren’s college costs by making gifts over the years and by contributing to educational savings accounts in each one’s name. Now, though, with the pandemic’ having affected careers and increased household costs, you realize there may be a bigger issue – your children are still laboring to pay off their own lingering college loan debt! (They are hardly alone in this problem; you’ve been reading articles about the fact that student loans are one of the highest sources of debt for Americans.) But these are kids under pressure, and you’ve been wondering how – and to what extent, you can help.
In fact, this isn’t the first time you’ve thought about the issue of lingering college debt. You’ve included student loan payoffs as part of your legacy to your children after your death. But, seeing your adult children’s household income severely reduced over this past year, your instinct is to find a way to provide more immediate help. At the same time, you realize, you have to consider the impact that financial help might have on your own retirement finances.
Consider coming at the issue “in reverse”, using the equity you’ve built up in your primary residence to help your children get out from under. With a Home Equity Conversion Mortgage, or HECM, you will be able to tap a guaranteed, growing line of credit, using the funds to bring meaningful relief to your children now, when the pressure of financial uncertainty is greatest for them. Most important, you will be in a position to offer that help without tapping the investment or savings resources you want to have available for your own needs.
Using a reverse mortgage to help relieve your children’s long-standing student debt burden is one way of making a gift of education after-the-fact!