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Q&A on paying for college: Financial aid, loans, FAFSA confusion

Figuring out how best to pay for a child's college education can be daunting. To make it a bit easier, Los Angeles Times business reporter Walter Hamilton is answering common questions about financial aid and student loans. We also asked Deborah Fox, head of Fox College Funding in San Diego, to provide insight and advice.

If you have more questions about paying for college, send them to walter.hamilton@latimes.com or leave them in the comments section below.

Question: My 17-year-old daughter will be applying to colleges at the end of the current semester. Since I'm 67 years old, I am concerned about being able to afford sending her to the college of her choice. Since my income is fairly high right now, I'm concerned that she won't qualify for financial aid, and a scholarship is long shot. What would be the best way for me to ensure that her education is paid for?

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Answer: Financial aid awards often boil down to a single factor: how much a college wants a student. Schools look for a combination of grades, test scores and extracurricular activities.

Families should research colleges thoroughly to try to match a child's skills or interests with specific colleges, Fox said. It’s an inexact science, but families should consult with high school guidance counselors and college admissions officers to determine which schools would value the student.

As a general rule, families usually should apply for aid even if they think they won’t get it. Depending on the situation, even well-off families can get assistance. And reapply every year the student is in school. Also, it's generally a good idea for assets to be held in a parent's name rather than a student's because student assets can reduce financial aid awards.

For this reader, Fox points out that the age of the parent may help. Financial aid awards are based in part on the age of the older parent. The older that person is, Fox said, the more income and assets a school would exclude from the calculation that determines the expected family contribution, or EFC. In other words, she said, the child of a 67-year-old typically would qualify for more need-based aid than the child of a younger parent with the same income and assets.

Question: What can one do with a low GPA but good recommendation letters and background experience, for a psych master's/MSW?

Answer: The short answer is: There's no easy answer. Grades are the single biggest factor that most schools take into consideration, and graduate program admissions officers would want to know why a college transcript is undistinguished.

Fox recommends that the student consider retaking classes in hope of getting better grades. Otherwise, search for schools that place less emphasis on grades and more on work or other practical experience. The trick, of course, is finding which programs would be willing to overlook sub-par grades. Call admissions departments and ask, Fox said.

"This is absolutely going to be legwork, especially for that graduate student," Fox said. "They have to make phone calls and ask what factors are given the heaviest weight in the admissions decision."

Question: My partner and I live together and have a daughter who is a junior in high school. He is retired (age 65) receiving a pension and Social Security while I (54) am still working. In filling out the FAFSA, how do we report our income? Should it be mine, his, or both of ours?

Answer: If a student's biological parents live together, then both would report their income on the FAFSA (Free Application for Federal Student Aid), Fox said. If only one is the biological parent and not providing the majority of support for the other parent, then only the biological parent is required to report income, she said.

Question: We own our principal residence and several rentals (they are in both our names). Is it better to open lines of credit on the houses (and can we do this on the rentals and on multiple houses, if necessary) to pay for a daughter's college education? Or should we take it from my partner's 401(k)s? I do not want to take money from my 403(b) accounts, as I would incur a penalty and a higher tax rate.

Answer: Never drain a retirement account such as an employer-based 401(k) or an individual retirement account to pay for a child's schooling. The reason is simple: Your child can borrow to pay for school. A parent can't borrow for retirement. Consider coming up with the money in other ways.

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