I’m going to get the final numbers within the next few days, but I submitted my FAFSA today and my EFC came out to over $43k. HOW IS THAT POSSIBLE if my EFC has always been about $1,500???
I’m supposed to graduate next year, debt free, but now I’m contemplating every worst possible scenario- dropping out to save money?
I transferred to this school as a junior (senior next year) from a CC so my merit scholarship was only $6k which brings the total up to about $28k.
My parents can probably afford to pay $6k so that’s about $22k.
According to the FAFSA results now, I MIGHT qualify for a $7,500 loan. (so I can be denied???)
That would bring it down to $14,500.
If I work 2 jobs this summer like I originally planned to anyway, I might make like $3k (assuming I get minimum wage)-
so that would be $11,500.
This is all hypothetical. My parents might not be able to pay the $6k, what if I don’t qualify for the full loan, or what if I hardly make money this summer? HOW DO I PAY FOR SCHOOL?
I’m freaking out and I’m going to the Financial aid dept at school tomorrow to figure out why the numbers came out like this.
My dad used his retirement fund as a last resort and took out $14k to help me pay the rest after scholarships, school grants, and financial aid.
I haven’t made money and my parents make a combined income of about $53k and this year they claimed 1 dependent instead of 2.
Would a private loan between $11-$15k be really bad?
With a combined income of 53k/yr, your parents’ assets would need to be absolutely through the roof to yield an EFC of 43k. Since you say your EFC has always been around 1.5k, this doesn’t sound possible. It sounds like you added in an extra 0 or two in your FAFSA. Calm down, review it line by line, and fix the error.
I’m gonna go ahead and assume (hope) the retirement withdrawal wasn’t because of the data entry error made today.
I looked through the documents my dad got after filing taxes and there is one about “distributions of pensions, retirement, etc” and there is a line in the tax form titled “untaxed pensions” or something with $88k. but this wasn’t included in my parents income? I’m 95% this was money my dad had to take out or transfer of his 401k to pay off the mortgage so the bank wouldn’t foreclose the house, before he filed for another loan from a different bank.
Could the $88k have affected that? That money went straight to pay off the bank so wouldn’t that count for something in the fafsa?
Also, I should clarify: my dad cashed out $14k from his 401k to help pay the remaining balance for school this year (junior year)
Since the $14k was included in the yearly income on the taxes, wouldn’t the $88k have been included as well?
I used the IRS retrieval tool to get the new numbers. Could there have been an error while filing taxes?
First, you always have an entitlement to 7,500 student loan.
If you try to write clearer and not guess about a bunch of stuff and jumble up breathless run on sentences you might get a better chance at relevant answers.
When FAFSA EFC changes radically and there is no change of income etc, then it is usually do to human error. But if you are saying your father took a disbursement from his protected retirement money then that may be counted as income, it is no longer protected in retirement funds. It doesn’t matter what he used it for. Income on your tax return is income. This was a bad year to do that.
Please check for comment tomorrow from people who know for sure how that is treated.
Regarding the 401k transactions in 2014:
What is on the 1099R? What are the amounts in the boxes? What is the code in Box 7?
You need to check EACH line of your fafsa. It sounds to me like you added an extra zero someplace…or misplaced a decimal point. That would make something like $1000 turn into $10000. So check each line…very carefully.
If your dad took out $88,000 from his retirement, this could affect your EFC.
Your first post is unclear. If your parents had $53,000 in income…plus $88,000 withdrawal from retirement to pay for mortgage, plus $14,000 withdrawal for retirement to pay for your school, you total would be $155,000…and an EFC of $40,000 or so is very believable with that amount.
You need to sit down with the financial aid folks at your college ASAP…and explain why those monies were withdrawn from the retirement accounts.
You are entitled to a $7500 direct loan…you will get that!
If the numbers ARE accurate and this was a one time dispersal it might make sense to take a gap year and attend school next year. But if this school does not meet need it may make no difference. You could still be gapped.
so would a $15k loan my senior year be really bad?
I know for a fact the $14k dispersal counted as income. But for the $88k, line 7 is code G and every box is $0 except for the gross distribution
Code G means the money was transferred DIRECTLY from one qualified retirement plan (401(k), etc) to another qualified plan (401(k) or an IRA, etc.). Consequently, that money does not count as a taxable distribution, because no money was received by the account owner.
The money wasn’t transferred, it was withdrawn to pay the mortgage. I don’t think there is a mistake at all, but student needs to request a review and for the school to use professional discretion to view this as a one time event.
To the OP…when did this $88,000 get moved around?
You need a clarification on what happened.
@MinnesotaDadof3 that’s what I thought, so based on that, if it doesn’t count as taxable income is that why it didn’t show up as part of my parents total income? like i mentioned before, the only “extra income” for 2014 was a $14k disbursement, which made the total income $69k.
I’m going to talk to the financial aid dept today, but I will find out exactly what was going on with the mortgage & $88k this afternoon so I can get more advice. This took place the summer of 2014. Thanks for your responses
When you use direct transfer if there is a 1099R with code G, you need to manually change the taxable amount to zero for that 1099R on the FAFSA.
To fix this, you need to log back into your FAFSA and correct it so that only the $14k is shown as taxable, not $102k.
^^
What were your parents’ total untaxed portions of pensions?
*If your parent uses the IRS Data Retrieval Tool and transfers his / her information from the IRS into your FAFSA, the answer to this question will be pre-filled and identified as “Transferred from the IRS.” *You must subtract rollover amounts from the total.
If your fafsa has been selected for verification and you’ve used the DRT, I wouldn’t change the rollover amount at this point. Contact the school and they will tell you what they need you to send them to show it was a rollover. Manually changing the amount would mean the DRT use no longer satisfies verification.
Agree with annoying dad. You cannot change the amounts transferred from the IRS because this would wipe out all the data transferred. We had to notify the colleges who made the adjustment for a 401k rollover.
Thank you for all this information! I tried to get an appt with an advisor & I was told my application hasn’t been processed yet (I submitted it yesterday) so I should wait until it goes through. I’m going to email them now and let them know there might be a colossal mistake in the data entry. I really hope this fixes the problem.
According to the tax sheet, the taxable amount on line 16b is the $14k
ALSO: I’m always picked for verification, so if my school realizes the error, can I still go back to the FAFSA and change it so I can get federal aid as well or does it not matter?
I tried to go on the app in edit mode so I could look at that one line and it wouldn’t let me. Is it too late to change it?