'Neither of us attended college': At 62, how can we afford to put our granddaughter through college?

By Quentin Fottrell

'Her life was very challenging before we got custody'

"She completed her classes in January, will graduate in June, and plans to pursue a Psy.D degree." (Photo subjects are models.)

Dear Quentin,

I am seeking guidance regarding scholarships and student loans. My husband and I have had custody of our granddaughter since midway through her freshman year of high school. She completed her classes in January, will graduate in June and plans to pursue a Psy.D degree.

Neither of us attended college, even though we have done well for ourselves, so we have no experience with this process. Her father has never been in her life, and her mother (my daughter) hasn't been involved since we petitioned for and were granted custody.

We are both 62 and set for retirement, so sending someone to college was not originally in our plans. There are so many webinars about scholarships that offer little value unless you pay for them. We are currently at an impasse and want to help our granddaughter.

I have two questions:

-- Where can I find a good resource for scholarships?

-- What is the best place to explore student loans?

Her life was very challenging in many ways before we got custody, including hotel-hopping with her mom, helping to raise her little sister and not being allowed to attend school for 28 days during her first semester of freshman year for no apparent reason.

Again, I feel like a fish out of water. We want to provide her with every opportunity to achieve her dream. We are open to any and all suggestions and guidance. We live in Virginia, but the schools she wants to attend - and where she has been accepted - are in Canada.

The Grandparents

Related: After our mother died, my sister went to nursing school. She asked me to cosign her $11,000 student loan. What do I tell her?

You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

I implore you to encourage her to keep her options open about applying closer to home as there are more financial-aid options.

Dear Grandparents,

Given what your granddaughter has been through these past years, I expect she will appreciate every moment of her education and the opportunity you have given her. I implore you to encourage her to keep her options open about applying in the United States, as there are more financial aid options.

A doctor of psychology program will take at least four to six years of full-time study. That's three to four years of coursework and clinical practice, followed by a mandatory one-year full-time internship. College could work out slightly cheaper in Canada, but that depends on financial aid.

For scholarships, start at studentaid.gov, the U.S. Department of Education's own site. After that, check out the Virginia Commonwealth Award, Virginia Guaranteed Assistance Program, Virginia Tuition Assistance Grant and G3 Program, which supports community college students pursuing job training. Eligibility is usually determined through the FAFSA.

Most parents have 18 years to save up a sizable portion of their children's education, often through a tax-advantaged 529 plan, and other similar plans; going to an in-state public school also helps cut down on expenses (something worth considering here).

On the other side of the admissions process, higher-education institutions are navigating a perfect storm of rising inflation, market volatility impacting endowments (which has only gotten worse since the war in Iran) and the specter of funding cuts by the current administration.

Colleges are also facing a decline in international-student demand, traditionally a rich source of funds. Demographic declines were not helped by the troubled rollout of Free Application for Federal Student Aid (FAFSA), which was plagued by delays and technical glitches.

Don't miss: 'I'm leaving money on the table': I'm 64 and my husband is 70. Should I take spousal benefits or wait for my own?

Applying for aid

There are two main types of student loans: federal student loans and private student loans. You should apply for federal student loans before borrowing from private student loans; the former have better terms. Mark Kantrowitz created this site to help navigate private student loans.

Kantrowitz, an expert in student loans and author of multiple books on the subject, says your granddaughter needs to file the FAFSA as soon as possible, but must decide whether to file as a dependent or independent student.

Check your court order for the exact legal term it uses - guardianship, custody, or adoption - since that wording determines which FAFSA category applies to her. If she's in a court-ordered legal guardianship, she's considered an independent student and your information is not required, he says. If you have legal custody, parent information will be required, though you can contact the colleges to ask for a dependency override.

If you have legally adopted her, she can file for the FAFSA as a dependent student with you listed as her parents. The FAFSA itself is used to determine need-based financial aid from the federal government, state governments and most colleges, he adds.

Less than 200 mostly private colleges use a supplemental form, the CSS Profile, to award their own financial aid. The others just rely on FAFSA data. "Colleges in Canada generally do not offer financial aid to U.S. students," Kantrowitz says.

A handful of foreign colleges offer U.S. federal student loans; search here. You can also find the full list here. There are 65 Canadian colleges listed, he says, including McGill University, the University of Toronto, the University of Waterloo and the University of British Columbia.

Don't miss: 'I feel shoehorned': My father funded my $800,000 Roth IRA. Does that give him the right to say how I invest it?

Beware of scams

"Beware of scams," Kantrowitz warns. "If you have to pay money to get money, it's probably a scam. There are several free scholarship matching services. The most popular ones are Fastweb.com and the College Board's Big Future."

Increasingly, parents are draining money from retirement accounts and home equity to pay for their children's educations. In fact, Sallie Mae said that the average amount withdrawn from home-equity loans, retirement funds and credit cards for this purpose rose last year.

Only biological parents, adoptive parents, and sometimes stepparents can apply for Federal Parent PLUS loans, which do not require as strict credit underwriting as other student loans. As such, it can be easier to get in over one's head.

Americans owe approximately $1.8 trillion in student debt, a figure that has risen by more than 40% over the last decade. The average student-loan balance in the U.S. hovers at around $38,000, so your gift will be able to help with a significant chunk of that.

Each college provides its own set of scholarships. These awards can be based on merit - academic achievement, athletic ability and/or other special talents - or on financial need. This is often one of the most fertile sources of financial support.

Talk through these options with your granddaughter and her high school; resources provided by high schools are all too easily overlooked. She will have more options open to her in the U.S. and, likely, her home state. She has a long, and I hope successful, road ahead of her.

Don't miss: 'My mother refuses to turn on the heat': Will America's war with Iran really push up our utility bills?

By emailing your questions to The Moneyist or posting your dilemmas on The Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.

More columns from Quentin Fottrell:

'We are committed Christians': Our son and daughter-in-law cut us off over politics. Should we change our $3 million will?

'It's the ultimate regifting': My mom gave me a house. Should I transfer it back to her to reduce capital gains?

My mother, 91, has dementia. Every bank says I need her signature to unlock her $100,000 stock certificate. What can I do?

Check out The Moneyist's private Facebook group, where members help answer life's thorniest money issues. Post your questions, or weigh in on the latest Moneyist columns.

By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

-Quentin Fottrell

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-04-26 0600ET