Buying a home and paying for education are two of the biggest investments most people will make in their lives—but some may not consider how these goals can work together. You might be able to take advantage of your homeownership status to help fund education for yourself or loved ones. Let’s break down what home equity is, how to tap into it wisely, and discuss a few practical ways it could help you fund new educational opportunities.

What Is Home Equity?

Home equity is the difference between the amount owed on a home and its market value. Equity builds as a mortgage is paid down and may grow if local home values increase. This value can be borrowed against in the form of a home equity loan, a home equity line of credit (HELOC), or a cash-out refinance.

Home values generally increased throughout the early 2020s, which means many homeowners could be sitting on significant home equity without even realizing it. According to federal data from Q1 2025, U.S. homeowners hold more than $34 trillion in home equity, which has more than quadrupled since early 2012. Nearly an astounding $14 trillion of that was earned just since the onset of the COVID-19 pandemic in 2020.¹

Why Use Home Equity to Help Fund Education?

• Potentially lower interest rates: Home equity products can sometimes offer lower interest rates than personal loans, credit cards, or student loans.
• Flexible use cases: Funds can cover whatever you or a loved one needs most, including tuition, textbooks, housing, or repaying existing student loans.
• May be tax-deductible: In some cases, interest on home equity loans might be tax-deductible.²

Ways to Tap Into Your Home Equity

1. Cash-Out Refinance: A mortgage that replaces your existing one with a larger loan, allowing you to take the difference in cash. This method allows you to receive a lump sum payment.

2. Home Equity Loan: A second mortgage secured by home equity. It works similarly to a traditional mortgage in that you borrow a fixed amount of money up front, which you then repay in regular installments over a set loan term. Since the loan is secured by your home equity, interest rates are often lower than unsecured loans, including some personal loans and credit cards.

3. Home Equity Line of Credit (HELOC): A revolving credit line that allows homeowners to borrow money using their homes as collateral. It functions similarly to a credit card, but often with lower interest rates and higher borrowing limits. It provides a credit limit based on the equity you own, allowing you to borrow as needed up to that limit.

There are two main phases to a HELOC: a draw period and a repayment period. During the draw period (typically 10 years), you can borrow money up to your approved credit limit while only paying interest on what you’ve borrowed. Once the repayment period begins, you can no longer borrow money against your limit, but instead must pay back both principal and interest over a set term (typically 20 years).

What Types of Expenses Can Home Equity Cover?

When you tap into home equity through one of the above methods, the money is yours to use for whatever you need. When it comes to funding educational opportunities, here are a few smart ways some borrowers may put those funds to work:

• Pay for college tuition: Cover the cost of tuition upfront, avoiding or reducing the need for high-interest student loans. This can help students graduate with less debt and more freedom to focus on career goals after college.
• Pay for room, board, or textbooks: College expenses go far beyond tuition. You can use home equity to pay for on-campus housing, off-campus rent, meal plans, textbooks, laptops, and other essential supplies that keep students set up for success.
• Repay existing student loans: If you or a loved one already has student debt, many people will choose to use home equity to consolidate and pay off student loans that have higher interest rates or less flexible repayment terms. This can help simplify bills and, in some cases, lower your monthly debt payments.
• Save for future educational expenses: Not sending a child to college quite yet? You can still tap into home equity strategically for long-term success. For example, you could draw from a HELOC as needed to help fund K-12 tuition or extracurricular programs, or deposit lump sums from a cash-out refinance or home equity loan into a dedicated college savings account to grow over time. If you’re able to secure a lower interest rate or better loan term, you could also dedicate monthly savings to future educational expenses. For example, if you’re able to save $200 every month by refinancing, that can add up to tens of thousands of dollars over the course of a child’s K-12 education:

Home equity can be a powerful tool for homeowners to achieve a wide range of educational goals. Get in touch with a Wintrust Mortgage lending expert to help you find the best way to tap into your available home equity and meet your individual needs.