Paying for higher education is a significant financial challenge. If federal loans, scholarships, and financial aid aren’t sufficient, some homeowners consider refinancing to access the equity in their homes through a cash-out refinance.

Advantages:

• A cash-out refinance gives you a large sum to cover tuition and other education expenses.
• The interest rate on a cash-out refinance may be lower than other forms of borrowing.
• Potential for tax deductions on the interest. Always consult a tax advisor.

Disadvantages:

• Refinancing can affect your eligibility for federal student aid, as it increases the reported income of the parents.
• Your home is at risk if you can't meet mortgage payments.
• Refinancing costs can add financial strain beyond the immediate need for education funds.