Americans have a weak spot when it comes to sending children to college. But by the time your kids are grown, you should be shedding debt to prepare for retirement, not piling it on. If your child is already college age—and you neglected to save in advance—there are alternatives to borrowing against your house. Consider state schools, which generally cost less than private ones; your kids may even be able live at home. And apply for financial aid, no matter how much you make. If your income is low enough, you may also qualify for low-interest federal loans (though I don't recommend other college loans, which come with credit card–size interest rates).

Better yet, don't let home equity debt be your last resort because you failed to save for your child's education. When your kid is young, open a 529 college savings plan, which allows your money to grow tax-deferred and leaves your gains untaxed as long as you put it toward education. To learn more, go to


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