Using a HELOC to Pay for Medical School - A Smart Alternative for Middle-Income Parents

Using a HELOC to Pay for Medical School - A Smart Alternative for Middle-Income Parents. Read up on the benefits, best features, and risks here.

Using a HELOC to Pay for Medical School - A Smart Alternative for Middle-Income Parents
A person hiding a stethoscope behind their back

A career in the medical field is noble and rewarding, but the costs can eat you out of house and home. There is only so much that parents from a middle-class background can do to provide sufficient funds for their ambitious children. Most of them are conflicted since they cannot ignore their mortgage payments, food, utilities, and groceries and don't wish to deprive their children of a bright future. The cheapest medical schools are not common, after all.

This is where a home equity line of credit (HELOC) comes in. The credit line can aid students with aspirations in the medical field who require significant financial aid to make their dreams a reality.

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The Financial Challenges of Medical Schools

Cheap medical schools don't offer the value that future doctors need for sustainable careers in the medical field. However, the tuition fee in established medical schools has skyrocketed, according to the Association of American Medical Colleges (AAMC). Today, the average family needs at least $30,000 per year for residents studying in the states and double that amount for residents studying out of state or privately.

Arranging that astronomical amount is a challenge for middle-income families, even if they qualify for financial assistance. Standard student loans can lead to debt that can take a student years to pay off.

Why Opt for HELOC?

If you opt for HELOC, you can borrow the amount you need for medical school against your home equity. Like a credit card, you can access a specific credit limit as per your home's value and the pending mortgage payments.

Some of its key features include:

Revolving Credit

HELOC is a revolving credit line. This means that you can utilize and repay the funds you use as many times as specified, but only during the specified period. This can be anywhere between five to ten years. You only need to cover the interest.

Variable Interest Rates

The interest rate you need to cover can fluctuate, affecting the borrowing cost. The rate is usually based on a benchmark rate.

Set Credit Limit

The credit limit in a HELOC is like a credit card and is based on your home's evaluated value along with the remaining mortgage amount. In most cases, borrowers can use up to 85% of home equity.

Repayment and Draw Stages

If you opt for HELOC, you will go through two stages: the draw and repayment phase. You can utilize the credit line and pay the interest during the former. During the latter, you have to repay the interest and principal amount.

Use Funds as You Like

Rather than going for the cheapest medical schools, parents can pay for the best for their kids. But they can also use the home equity credit line for other expenses such as home renovations, medical bills, debts, etc.

It Is a Secure Loan

Since your home's equity secured the line of credit, it is secure. But bear in mind, if you fail to repay the whole loan, your home can undergo foreclosure.


You can get tax deductions if you use the credit line for a qualifying expense such as education. However, this can change as tax laws change. Ask a professional to provide the latest tax information so you can benefit and save money.

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Top Benefits of Using HELOC

Some of the best upsides using HELOC include the following:

Enjoy Low-Interest Rates

HELOC interest rates are way cheaper than those on credit cards and loans. Plus, it can change with time and is tied to a specific rate, making it a financially sound option for medical school.

Pay When You Can

You don't have to take care of the HELOC repayment immediately. Unlike standard student loans, which students must start covering immediately after graduation, you can get a custom repayment plan for your HELOC repayments. For example, you can pay off the interest first during your child's time at medical school and take care of the principal amount later.

Get Access to Sufficient Funds

Even the cheapest medical schools have living expenses and additional costs that can add up. With a HELOC, you will have access to substantial funds to cover these, thus ensuring your children have nothing to stress about during their studies.

Save More Money

Save your investments and nest egg for a rainy day rather than spending it on medical school. Use it for your retirement or investments that can support you and your family.

Risks and Considerations

While a HELOC sounds great for middle-income parents struggling to pay for medical school for their kids, it isn't a perfect solution. Here are some risks and considerations you should keep in mind to make an informed decision:

The Market Can Fluctuate

As mentioned, HELOC interest rates can change with the market, and the variable rates can increase your monthly payments. Make sure you have backup funds that can help you in this case.

Your Home Is Treated as Collateral

If you cannot pay timely repayments per the agreed-upon plan, it can lead to foreclosure. Remember, when you opt for a HELOC, your home is treated as collateral. Plan your finances carefully so this doesn't happen.

You Need to Be Disciplined

Even though HELOC repayment plans are flexible, that doesn't mean you can be lazy with repayments. Follow the established terms in the agreement so you don't go into more debt.

Whether you are a student responsible for your own education or middle-income parents looking for the cheapest medical schools and funds for your child's education, a HELOC can help. Boasting flexible and low interest rates, tax benefits, and access to a substantial amount of money, it can help you make a medical career a reality.

Contact RateSimple for the Best HELOC Plans

While a HELOC sounds like the answer to all your financial troubles, it has risks. But with help from the professional home loan agents at RateSimple, you can ensure the best education for your kids without sacrificing your financial health. Contact us for a consultation today by dialing [phone number].