Autofly,
Thank you for the detailed reply. You bring up several valid points re deferment and asset isolation in the event of default that we will carefully weigh. For the moment we are not planning on moving the debt under the HELOC, but we would have that as an option depending on the size of the HELOC we get.
[The whole rate situation did change as of 7/1/06 when the federal government reduced its subsidy of student loans. Right now new PLUS loans are at mandated 8.5% fixed with a 3% origination fee and a 10 year term. Repayment begins 60 days after the loan is fully disbursed in a given year (in our case the beginning of the 2nd semester each year).
Through a consolidation we reduced the first loan to 8.25% with automatic payment. After 36 consecutive on-time payments it will drop to 7.00% fixed (non-deductible). As you can see, the days of highly advantaged rates on student loans are gone.]
Back to my original question, I may need to restate it so it is the focus of replies because I'm not feeling any more infomed about my decision.
If YOU faced this opportunity, would YOU take the full $475K HELOC availability? If not, what causes you to take something less?
(Holding aside the possible uses of the funds, or if my daughter will be making any of the payments (she won't, but she will have some Stafford student loans in her name), whether the lenders are harming all borrowers by reporting HELOCs as revolving debt, etc. I'm sure WaMu has figured out how they will report these laons somewhere in the first 250,000 of them that they did and I am unlikely to get them to change their ways! LOL!)
Thank you again to anyone able to help enlighten me about this question. Regards to all.
DaleOC