<p>My inclome last year would have enabled us to get FASFA scholarship awards. Because i withdrew 401K money to pay bills and consolidated 401K to an IRA the 1040 considered this as income and greatly changed my SAR score. The school is putting us through the standard process of completing forms and do not seem to understand. Additionally since we are out of state they are charging us double. 26K instate 44K out state. Impossible.</p>
<p>1) will the school bend or help
2) what is the specific process that will get this communicated
3) should we skip all and just send my son to community college instead of University of Arizon, since no one is listening.
4) although we have approval from sallie mae and federal loans the amounts at the end of the 4 years exceed 300k with interest.</p>
<p>Need to quickly resolve or be forced into community college.</p>
<p>RCC</p>
<p>Withdrawing money from a 401k would be considered income and is reported as such on your 1040. Transferring money from a 401k to an IRA may be reported as a distribution on your 1040 (line 15a) but does not increase your AGI (not reported on line 15b), so it should have no impact on your EFC. </p>
<p>Colleges are used to dealing with a similar situation with Roth conversions, so a rollover from a 401k to an IRA shouldn’t be an issue. Did you incorrectly report it as income on your FAFSA? If so, can you file a corrected FAFSA?</p>
<p>You should be able to contact the financial aid office and work through the rollover numbers; unfortunately the distribution taken will still probably count as income, but the rollover amount should not count against you.</p>
<p>By the way, if there’s any way you could pay back the distribution, then it won’t count as income. The payback has to be done within 60 days.</p>
<p><a href=“http://www.fool.com/personal-finance/taxes/2007/02/02/borrow-from-your-ira.aspx[/url]”>http://www.fool.com/personal-finance/taxes/2007/02/02/borrow-from-your-ira.aspx</a></p>
<p>That amount of loans is literally 10X the amount recommended. No undergrad degree is worth that. </p>
<p>Of course the publicl will charge out of state students dramatically more. You don’t pay taxes in that state. Why should those taxpayers subsidize you?</p>
<p>Why not go to your in-state public? BTW, publics very often (even in-state) don’t have FA money of their own to give. If don’t qualify for Pell all you most likely will receive is the $5,500 Stafford.</p>
<p>If your child did not apply to the in-state flagship you might consider taking a gap year. The 401k would no longer be an issue. </p>
<p>Btw, FAFSA does not give scholarships, aid, or $. It is a form only that is used for determining Federal aid eligibility. Each school uses the figures to calculate their own aid pkg.</p>
<p>The only federal “award” that doesn’t need to be paid back and that is not a significant amount of money is the Pell Grant.If not receiving that $5000+ or minus dollars is an impediment to your student to attend and it sounds like you would have needed significantly more in aid than Pell and if you are talking about hundreds or thousands of PLUS loans then no you should not send this student to an out of state public. If it is too late and reasonable financial offers were turned down at other schools, a gap year might be better than bailing and starting at a community college as a chance to rebuild a financially feasible college list. YMMV.</p>
<p>Withdrawing money from a 401k will be counted as income. Plain and simple, there is no way around that and a school is not going to wiggle on it. Moving money between a 401k and an IRA should not affect your EFC (assuming you did it as a rollover and within the time limits - 60 days I think).</p>
<p>Yes, public colleges charge considerably more to OOS state students than they do to their instate students. Surely you were aware of this? </p>
<p>FAFSA scholarships? There are no FAFSA scholarships. The main federal need based grant is the Pell grant. The maximum Pell grant is $5550 a year, no matter how much your school costs. To get the maximum Pell requires a 0 EFC. As the EFC goes up, the Pell goes down and phases ot completely at a little over EFC 4600. Even if yo had qualified for the max Pell, $5550 is a drop in the bucket for a $44,000 annual cost.’</p>
<p>I don’t think your problem is that no one is listening. I think you may have had some very unrealistic expectations of what sort of FA you would get at an OOS state university. Most State universities do not promise to meet full need for their instate students, let alone OOS students. Even without the 401k issue, it is doubtful you would have got anywhere near enough money to cover $44k a year.</p>
<p>Absolutely do not take out the sort of loans yo are talking about. That would be crazy. No school is worth that sort of debt, not even an Ivy. Did your student even apply to instate universities? What sort of FA was he offered for instate? If he might be eligible for good merit aid at an instate, then he might be better off waiting and reapplying for next year (merit awards tend to be more generous for freshmen than transfers). If his stats are not high enough for merit aid, then starting at a CC is a fine idea. We know several students who started at CCs and then transferred. Their diploma carries the name of the school they ultimately graduated from, and they minimized their debt.</p>