A decade ago the answer was easy: federal student loans cost about the same as a mortgage or less, so there was no reason to put your house on the line for tuition. In 2026 the arithmetic has flipped, at least for parents. Parent PLUS loans for the 2026–27 award year carry a fixed 9.07% rate plus a 4.228% origination fee taken off the top. Home equity lines of credit averaged about 7.25% in mid-2026, and 30-year mortgage rates have spent the year in the mid-6s. On rate alone, borrowing against the house now looks like the cheaper way to fund a parent's share of college. The full answer is more complicated.

The rate comparison, honestly

  • Direct undergraduate loans (the student's own): 6.52% for 2026–27, with the federal safety net attached (more on that below).
  • Parent PLUS: 9.07% plus the 4.228% fee. On $20,000 borrowed, the fee alone is about $846 before a dollar reaches the school. PLUS loans are still federal loans with federal borrower protections, but the debt belongs to the parent, not the student.
  • HELOC: about 7.25% on average in mid-2026, usually a variable rate, secured by your home.
  • Cash-out refinance: mid-6s in 2026, the lowest rate on the list, but it re-prices your entire mortgage balance rather than just the tuition money, and closing costs typically run 2%–5% of the loan amount. If your existing mortgage carries a lower rate than today's market, this is the most expensive option of all.

The spread between Parent PLUS and a HELOC is nearly two percentage points before the fee, which is real money across four years of tuition. That is the case for the house. Everything that follows is the case against.

What you give up when the collateral is your home

A federal student loan is unsecured. Fall behind and your credit suffers; nobody takes your house. A HELOC or cash-out refinance turns tuition into mortgage debt, and mortgage debt is enforced by foreclosure. Federal loans also come with a safety net that no home-equity product offers: deferment while the student is enrolled, forbearance in a crisis, repayment plans tied to income, and forgiveness programs for some borrowers. A HELOC has a payment due every month regardless of what happens to your job, and most HELOCs carry a variable rate that moves with the market. If the tuition years coincide with a layoff or a health problem, the difference between "unsecured with options" and "secured with none" is the difference between a hard year and losing the house.

The tax deduction is not coming to the rescue

The mortgage-interest deduction will not rescue the math, for two reasons. First, interest on a home-equity loan or HELOC is deductible only when the money is used to buy, build or substantially improve the home that secures it, within a $750,000 combined-debt cap, and only if you itemize. The 2025 tax law made that rule permanent. Tuition is not a home improvement, so HELOC interest spent on college is not deductible at all. Second, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly in 2026, so most families do not itemize in the first place. Run the numbers assuming no tax benefit. If one shows up, it is a bonus.

Financial aid sees cash, not equity

The FAFSA does not ask about equity in your primary home, which is one of the few breaks homeowners get in the aid formula. Borrow against that equity and park the proceeds in savings for next year's bills, and you have converted an invisible asset into a visible one: cash and investments are reported, and they can reduce need-based aid. If you do tap the house, draw only what the current bill requires, which is exactly what a line of credit is built for. Some private colleges use the CSS Profile, which can count home equity, so check each school's policy before assuming anything.

The order of operations

  • Save first, in the right account. A 529 plan grows tax-free for qualified education expenses, and starting with tax year 2026 it can also cover up to $20,000 a year in K–12 tuition per beneficiary. A Coverdell education savings account allows $2,000 per beneficiary per year, with income limits. Both work best when the child is still years from campus.
  • Let the student borrow first. Direct undergraduate loans at 6.52% cost about what a mortgage does, with protections a mortgage cannot match, and they give the student a stake in the price of the degree.
  • Then compare the parent's options with the full cost in view. If you must borrow for your share, a HELOC beats Parent PLUS on rate. It loses on risk, on flexibility and on the tax and aid rules above. Our 2026 guide to HELOCs and home equity covers pricing and how much lenders will let you draw; if you are weighing a full refinance instead, see the rate-and-term versus cash-out section of our refinancing guide.

A mortgage can pay for college. Whether it should depends on what you are prepared to lose if the plan goes wrong. For most families, the house is the wrong thing to bet.