Smart Strategies To Pay For College

OCEAN CITY – Your children have been accepted for college admission. That’s
a cause for celebration, but with annual costs at top schools approaching $40,000,
you’ll likely need a strategy to pay that expense without depleting your cash
reserves or disrupting your investment portfolio. Leveraging the equity in your
home or the assets in your portfolio could provide an ideal solution.

Home equity and securities-based loans may provide:

Lower costs: the loans are secured so you may benefit from lower interest
rates than with unsecured forms of debt such as personal loans

Tax-efficiency: the interest on a home equity loan may be tax-deductible in
many cases.

Your home isn’t just a valuable asset — it’s also a powerful
borrowing tool. To help you utilize your home equity, Merrill Lynch offers
the Equity Access® home equity line of credit, an adjustable-rate
loan with an initial revolving line of credit. You can draw or replace funds
during the initial period at your convenience without incurring unnecessary
interest expense, plus you can choose to make interest-only payments.

A Loan Management Account® (LMA® account) is another
potential source of college funds. With an LMA account, you can pledge a broad
range of eligible assets as collateral, leveraging their combined value while
helping to keep your investment strategy on track. Your available credit is
based on the total value of all the eligible assets you pledge. In turn, the
interest rate you pay is based on your total available credit, not your
outstanding balance, which can lower your cost of borrowing.

You can access your LMA account through a variable rate revolving line of
credit, request fixed-rate and/or term loans, standby letters of credit, or a
combination of these options. The variable rate revolving line of credit is
ideally suited for meeting education costs because it allows you to draw down
funds as needed, saving unnecessary interest expense. And you can easily access
these funds through convenience checks, FedWire® or ACH (automated
clearing house) transfers.

Keep in mind that securities-based lending involves certain risks. A
decrease in the market value of the pledged securities may require the deposit
of additional funds or the liquidation of some or all of the pledged assets
without notice, possibly with adverse tax consequences. You should carefully
review the risks involved and consult an independent tax advisor in order
to understand fully the tax implications associated with pledging securities as

Merrill Lynch Wealth Management Advisor. She can be reached at 410-213-8520.)