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<p>I’m going to try this one more time. For FASFA purposes, ANY money you contribute to your 401k will be added back in as income. It will NOT NOT NOT reduce your income for the year. It won’t. </p>
<p>Re: SCAD…the school does not guarantee to meet full need. The cost of attendance is very high. The only thing the FAFSA does is do a computation for your eligibility for federally funded need based aid. If your EFC is below $5000 you would get a portion of the Pell grant (which is UP TO about $5000 for the year) a drop in the cost of attendance bucket for SCAD. </p>
<p>SO…what you really need to do is this…you need to determine how much your FAMILY feels they can contribute to your daughter’s college education per year. Since SCAD does not meet full need, you are not likely to get aid that will make up the difference between the Cost of Attendance and the EFC regardless of what your EFC is. It could be $0…and you will be paying a lot.</p>
<p>Good point about SCAD. Other students have complained that their aid packages have been poor. </p>
<p>I don’t think SCAD has much institutional aid to give, so once a student gets whatever federal aid they qualify for, the rest is gapped. </p>
<p>So, if you can’t afford to make up a gapped difference, then you need to look at other schools. Art/design schools are often bad with aid.</p>
<p>Your 401K contributions for the year that FAFSA or PROFILE is examining will be added back to your income. However, if that money is truly extra money that you would have sitting in a savings account, yes, putting it in a 401K would keep it from being counted as part of your assets. However, financial aid formulas are very heavy on income and much lighter on assets. You get a protection allowance of about $26K per parent that is not assessed for college, but the assessment is about 5-6% anyways, not a huge amount. It’s the income that is an issue. </p>
<p>However, if you are right on the brink of being PELL eligible or simplified needs eligible and that little bit of assets may put you over, yes, the 401K would be the place where you can park that money and not have it assessed as one of your assets. </p>
<p>Look for a financial aid profile of the school that interests your student. Do they tend to meet full need or do they gap? Are they loan heavy? If the school is private and expensive, that little bit of PELL is not going to make a dent in the $50K cost. Unless the school is one that tends to come up with some money through fin aid and scholarships, it is not going to be easy getting the funds to pay that cost. PELL is only about $5K. SEOG is often not even an option at most school, but even if it is, it’s only a few thousand more. You are talking about loans and work study for the rest of the tab. And the max Stafford a kid can take as a freshman is about $10K and that’s if the parent does not qualify for PLUS. Perkins only gives about $2-3K more in loans. The parent can borrow through PLUS but that’s at 9% interest and payment start immediately. </p>
<p>Not a problem to take the chance and apply to a school that looks unlikely to come up with the needed funds, but make sure your student has some safeties, and financial safeties, at that, in case the financial aid and scholarships do not pan out.</p>
<p>cptofthehouse…the OP is thinking their 401k contribution will reduce their INCOME for the year so it will be below $50K.</p>
<p>A contribution to a 401K will be added back in as income…but yes…the balance IN the account will not be counted as an asset…but that is not what the OP is worried about. The OP wants to get their income LOWER than $50K.</p>