Providing your children with the financial resources they need to pursue their college education is probably one of the most important things you will ever do for them.

Statistics from the United States Census Board show that people with a bachelor's degree earn at least 60 percent more than people with a high school diploma. Over a lifetime, that difference amounts to more than $1 million. Women with a college degree are at even greater advantage. Statistics show women with a bachelor’s degree or higher earn 91 percent more than women with a high-school diploma.

Like most things however, it takes money to make money. In this case, it takes money to pay for a college education.
(See below for more information.)

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If you’re wrestling with the question of how to pay for your child’s education, a home equity loan may be worth considering. A home equity loan is a second lien against your home; a loan that allows you to borrow against the equity that has built up as your home’s value has increased and your mortgage has decreased. Interest is calculated at a fixed rate and the loan is repaid monthly over a fixed period of time, generally 10 to 15 years.

Most lenders will allow you to borrow up to 80 percent of the appraised value of your home minus the balance of your mortgage. If your house is appraised at $150,000 and you have a mortgage of $20,000 your equity is 80 percent of $130,000 or $104,000. That’s more than you probably need to pay for college – let’s hope – but technically that’s how much you could borrow.

How much you decide to borrow will depend largely on how much you need and how much you can afford to pay back each month. To determine what is reasonable, complete a detailed analysis that considers your income, your monthly financial obligations and all your debts including your first mortgage, if you have one. Do not commit to a monthly payment that is more than you are comfortable paying and remember that it is your home on the line if you forfeit.

Shop around for the best deal and the lowest interest rate. Negotiate with several lending institutions and don’t be afraid to make lenders and brokers compete for your business.

Today, with interest rates historically low, tapping into the equity that has built up in your home is an inexpensive way to access funds.