Question has been asked a few times already. I utilized search function and read the top 5 threads E2E. Still have a few questions about particular situation:
- ME - 28 years old, low 100k salary, 400k NW, single, no kids, stable (for now) employment, renter, no RE exposure
- Parents - 55 / 48 years old, 90k salary, 400k NW, married 2 kids (including me), stable (for now employment), home owner, no RE exposure
- Brother - 17 years old, lifeguard, gamer, super mathematically inclined, socially awkward (overall good kid)
Big fish, small pond analogy doesn't hold true! Especially for competitive programs. Brother hasn't narrowed majors just yet but all options are extremely competitive.
- Majors Considered
1) Actuarial Science
2) Comp Sci
3) Comp Engineering
Parents financial status puts us with $0 help to attend Michigan. FAFSA is a rip off! The financial aid offered was ALL unsubsidized loans. This means we are accruing interest day 1 of college till paid off. This is the PREFERABLE option compared to PLUS loans. These (consigned by dad) start at 10.5% interest rate.
My first offer to my parents was 'lets chip in 50/50' and pay brothers way through college together. TC per year is around $30k. Me/Dad can cash flow it yearly. Happy to and would consider it feasible for both of us. Assuming brother gets an internship from year 1 and with a bit of his savings we should pay around 75% of that estimate for years 2-4.
Mom is adamantly against this idea. Her idea is to cash out refinance the house. We were exploring lenders for a refinance. Appraisal $375k, remaining mortgage $150k 4.5% ARM. Original idea was just to refinance to a 15 year fixed at 2.75%. Now Mom wants to cash out refinance for $75k of home equity. The excess over the first years TC of attendance ($45k) would be invested in a Merrill S&P 500 index fund to funds years 2-4.
I was hoping for the cash flow option to pay off my brothers school, but don't know if it is my pride or my financial acumen kicking in....
Thoughts on which options is preferred??
*Please note - University of Michigan, the majors in consideration, and 4 years college timeline are NON-NEGOTIABLE. (mistakes I've made and regretted immensely)