The year that the FAFSA was taken from, my dad took out $100k from his 401k to help pay for our house, which then was noted on the FAFSA that he makes over $100k. This made my FAFSA EFC $20k, but my family income is really only around $45k. Is there anything I can do about this or is it too late?
Yes, you can explain this to the colleges where you applied for financial aid. All have some process for dealing with unusual situations like this. Check their web sites.
Will you also do the CSS Profile? Or only FAFSA?
We had this issue, our income looked higher by 30K due to 401K withdrawal. It will impact the pell grant eligibility for that 1 year. We did fill out special circumstances forms to explain how the money was used, for us a chunk was medical. When we looked at college costs using the net price calculator for each college and ran it 2 times, the larger income with 401 included, and then again for “normal” years, and looked at the costs across 4 years.
So I should email my college’s financial aid and explain the situation? And everything should should be fine for every other year besides the first year?
Most colleges have a form on the FA page to appeal. It is sometimes called ‘special circumstances’ and will have different sections for different situations like death of parent, loss of job, medical bill. Depending on the circumstances, different forms will be required like tax return, medical bills, job termination and you send in the form and the documents.
The other years you will use a different tax year, and the financial aid will be based on that income.