My HELOC is acting a little funny

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Q. We obtained a line of credit to pay for our child’s college expenses. To get a good interest rate, we had to take $25,000 immediately on a $100,000 line. After paying a $4,000 installment to the school, we thought the credit line would drop by that amount. Instead, the bank added another $4,000 to our line. Shouldn’t the line drop each time by the amount we use, rather than be an excuse to add more to our account? Or is this another devious method banks employ to make more money via added interest ?
— Confused

A. This is the kind of question you need to take directly to your bank.

Without seeing the actual loan agreement, we can’t tell you more about the specific terms.

But Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton, asks the question: What’s the big deal?

“If you have a line of credit, you only pay interest on the outstanding loan amount,” Lynch said. “If they increase the line for whatever reason, it doesn’t cost you anything until you use it —so don’t use it.”

He said he has no problem if a lender wants to increase a credit line because it won’t cost a dime unless you use it.

The key, he said, is to get yourself in a position where you do not need the credit line.

He also had something to say about paying for an expensive college or a college you can’t afford.

“I have to stress how much I am not a fan of taking out huge loans to finance college,” he said. “If you can’t afford to pay it, consider community college first, then try transferring into a state school.”

He said colleges are way too expensive, and consider this: many kids end up graduating from good schools with no job and then they’ll be living back at your house.

Your ship may have already sailed, but if you can’t afford a costly college, consider alternatives.

Email your questions to moc.p1544751760leHye1544751760noMJN1544751760@ksA1544751760. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.