patrick.net

It may be a good idea, since student loans are evil. There's all sorts of crazy law which makes student loans non-dischargeable in bankruptcy, they can garnish your wages to pay them, etc. You can walk on a HELOC and destroy your credit rating, but that's probably where it'll end :)

All college is free if you get heloc to pay it off then default on heloc. Beats working.

PockyClipsNow says

All college is free if you get heloc to pay it off then default on heloc. Beats working.

Heloc is secured by property, why would someone want to lose their residence to pay off a student loan?

This scheme may quickly get out of hand, especially in non-recourse states.

FortWayne says

PockyClipsNow says

All college is free if you get heloc to pay it off then default on heloc. Beats working.

Heloc is secured by property, why would someone want to lose their residence to pay off a student loan?

Let's say you put 3% down (or maybe even 0% when those loans come back), then a year or so passes and your home is worth $80K more, so you tap your bank for a HELOC, pay off your student loan, then default on your mortgage and sit around for a couple years waiting for the bank to finally foreclose. They take the home but you got the money that you wanted.

Many private student loans are much higher than the interest on a HELOC, which makes sense right there. Trade a higher interest rate for a lower one.

Second a mortgage can be discharged should something bad happen, while a student loan can't. Makes much more sense here too.

As for sitting in a home these days without paying a mortgage... If you default on your loans today, it generally only takes a few months for them to get through all the foreclosure paper work. I purchased a home that had been 3 months late and they were foreclosing already.

The thing is, that was a new loan. The person didn't like the new loan terms and decided to try a strategic default. 3 months later, they had fully processed everything. If they have all the paper work on the loan ready, they can foreclose quickly. If it's been sold 8 times, it takes them longer to pull it.