<p>Hi, I'm a junior in a state university. My dad was laid off last year after 22 years at a company and decided to take out all of the money for his 401K. I live in the south and my EFC last year was around 5000, this year due to the 401K its 46000. I would say for everything my college costs around 15,000 dollars a year. My parents did not put me on their taxes as a dependent because they were told since they didn't really give any money towards my college then they couldn't. My parents are great but with 2 other kids at home they are not able to give me much money for school. I don't know what to do. I talked with the financial aid office and they told me I have to use their tax forms for the FAFSA which I did. Its really frustrating to me that I'm being punished for my dad being laid off. Is there any other choice for me but to get Private Loans?</p>
<p>You’re rather stuck with loans. I don’t think you can borrow $15k though. The most you could borrow is like $7500. </p>
<p>It’s too bad that your dad took out all of the money at one time without thinking of how that would affect your aid. You’re not being punished for your dad being laid off. This is just the result of your dad deciding to take out all the money at one time. That was his decision. He could have rolled some of it over and it wouldn’t have hurt your EFC.</p>
<p>It doesn’t matter that they didn’t declare you on their taxes. They probably could have declared you…it’s not just about paying college costs. Maybe they can refile and claim you and they can use that return money for your college.</p>
<p>At least for your senior year, your EFC will go down a bit. However, if your dad still has a big chunk in savings, then it may not go down to $5k.</p>
<p>What is the breakdown of your COA for your school? Is there any way to cut costs to lower than $15k.</p>
<p>Thats exactly what I knew I would hear- and this would be for my senior year. Honestly, my dad has never had much to do with anything dealing with my schooling and I don’t think that anything could have stopped him from taking it out.</p>
<p>Tuition (and fees)
$ 5,180.00</p>
<p>Housing/Food $ 7,778.00</p>
<p>Books $ 1,200.00</p>
<p>Personal/Misc./Travel $ 4,280.00</p>
<p>Total for Residents $18,438.00</p>
<p>I don’t ever spend that much on books or travel. I only drive home (6 hours) every other month.</p>
<p>it looks like you should think of becoming and independent student
b
basically all youd have to do is move out and live on your own for a semester or two and get a job to cover your costs. that way your parents income / assets and other 401k stuff wouldnt’ be counted against you as far as EFC goes. although I heard that if you go this route your own icnome will be assessed at a higher rate that your parents’ income would be, but even with that loss of protection you shouldnt have as high an EFC as if you did.</p>
<p>alternatively you could start commuting to college which should cut your room costs and you wouldnt need to get a meal plan or an oncampus meal plan anymore.</p>
<p>I don’t really have to worry about becoming an independent in the future because next year <em>hopefully-fingers crossed</em> I’ll be a law student and according to the new FAFSA dependency stuff that will make me an independent.</p>
<p>And there really is no way that I can live at home and commute at all- my school is 6 hours away and even if I transferred to the closest university to my house it would still be 3 hours!</p>
<p>I’m stuck and I know it. I just thought maybe… maybe… :)</p>
<p>Bedouin…you can’t just “think of becoming an independent student” for financial aid purposes. You must be: an orphan, a ward of the state, married, have a dependent who you support, a veteran, have a bachelors degree, or be over the age of 24. If you aren’t any of the above, it will be VERY hard to become independent for financial aid purposes. Just “moving out and living on your own” won’t cut the mustard for financial aid independence. Sorry…this information is misinformation.</p>
<p>MCTOMES…you need to check EACH law school. Some law schools continue to REQUIRE parent information on the FAFSA.</p>
<p>many schools have like a bus service or something or an agreement with their home city like that if you move to the campus. That’s why I’m talking about independent, if you can sever ties with your parents you can get reduced tuition rates and you might even qualify for a Pell Grant that you could repurpose at least cover rent at an apartment or something, </p>
<p>I know University of Maryland had something like that within the city of College Park, with which all students could use their cards to get free bus service throughout the city. That way your transpo costs will drop to zero (you won’t need a car anymore, and you won’t need to pay for insurance and maintenance fees) and you might have a cheaper living conditions if your independent of the college campus rather than living in or on it.</p>
<p>
[quote]
Sorry…this information is misinformation. /quote]</p>
<p>Maybe I used that sword wrong. I didn’t mean being independent on the FAFSA, i mean living independenly of the college campus, cutting out a bulk of the non-tuition and non-book fees such as room, board, and eating clubs.</p>
<p>So thumper1 are you telling me I need to get pregnant, go to war, kill my parents, turn 24 and get married? JK!! I know that its no easy task I just hoped that there would be some loophole that I had missed. Its very frustrating. I guess I just now have to hope that I can get a private loan to cover all the costs. I am going to try and apply for some more scholarships that are not based on financial need as well!</p>
<p>that’s funny. but seriously though you don’t have to go to war to be a vet I think you just have to be non-dishonrably discharged, and even if you do have to go to war I don’t think that you have to be the killer of your parents to get independence on the FAFSA. For instance your parents could be dead before you start college and then you could be a ward of the state depending on circumstances. And you only have to meet 1 criteria not all of them (for example; if you are an orphan you don’t also have to be a veteran, and you don’t have to be pregnant person neither). </p>
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<p>Maybe I used the wrong wrod. I don’t mean independent on FAFSA really, I mean independent as in not living onc ampus, which is MUCH cheaper in most cases. if you move to the college town, you can get cheaper meals, cheaper rent, and free transportation in most cases.</p>
<p>Well even if I do need my parents on a FAFSA for law school, the normal EFC is around 5000 so I should be a lot better then if it were 46000 again!</p>
<p>AND I do know that you don’t need to have all of the criteria to be considered a veteran I’m trying to be funny because I’m so stressed out with all the essays I have to write as a history major I’m trying not to get upset. Crying won’t help!</p>
<p>You are a strong person mctomes and I think that you will pull through. remember as a Lawyer you will only have to go to school for 3 years. its expensive but with private loans you might be able to do it. I also hear that if you are interested in going for the government (as a prosecutor, child advocate etc) you might be able to get loan forgiveness for schools like Harvard and Yale Law School. Those might be cheaper, but if you don’t get in or dont want to go to those who you can also try to go to a cheaper regional state school if you are knowing already where you have to want to find legal work working as a lawyer in the legal field.</p>
<p>mctomes it’s really unfortunate for a number of reasons that your father chose to withdraw his entire 401k. He will have to pay taxes on the money as if it were income (since it wasn’t taxed when it was paid into the 401k) and he’ll have to pay a penalty on the withdrawal if he hasn’t already paid it.</p>
<p>I don’t know your parents’ specific situation - and you don’t need to give details - but even if the 401k funds were desperately needed, many plans allow for the funds to be loaned rather than withdrawn completely. This would have avoided your current difficulties with FAFSA.</p>
<p>Since withdrawn 401k funds must be rolled over within 60 days in order to avoid a penalty, and you state that the withdrawal happened last year, it’s too late to retroactively change anything.</p>
<p>Bedouin you surely mean well but please don’t mix “living independently” with “independent status on FAFSA”. The definition of independent for FAFSA is very specific and does not apply to the student in his or her current situation.</p>
<p>And I had received 7000 a year in a scholarship. However, it was based first on grades and then on financial need. So bye bye scholarship! </p>
<p>*</p>
<p>Are you sure that you’ll lose your scholarship? Is it renewed and reviewed by need each year? I’m not sure what you’re saying. Was it two different scholarships - one that was merit and one that was need?</p>
<p>Can you live off-campus to cut your living expenses (such as rent a room or share a cheap apt with someone)?</p>
<p>Can you work over the summer to earn as much as you can? My younger son once worked two part-time summer jobs (to maximize his hours) to buy a more expensive car than what we would pay for. </p>
<p>Can you work part-time during the school year?</p>
<p>Living off campus might cut the overall expenses, but the question is can it make up for the difference due to the lost scholarship (if indeed it is need based). Reducing living expenses by $7000 is a LOT. There will still be off campus living expenses. </p>
<p>Of course this student should do everything possible to conserve resources. AND he/she should also head over to the financial aid office ASAP and find out the provisions of that scholarship. I’m saying this from experience with DD. Her grant was a combo of need/merit…but it was renewable based on her GPA. So…check with finaid. You need to know what the provisions of your scholarship renewal. AND also explain why that money is there…that your family is using it for living expenses. They may give you a special circumstances form to complete…this is done at the discretion of the schools…but if your parents are not employed…worth asking about.</p>
<p>The student is going to have to work over the summer (maybe work 2 jobs), work during the year, borrow the $7500 Stafford, and perhaps borrow a bit from his parents (It sounds like they have a chunk of money right now. )</p>
<p>Since the EFC went up so much ($5k vs $46k), that means his dad took out a TON of money - much more than their normal annual income (which yields a $5k EFC).</p>
<p>BTW…I’m wondering now if that EFC is right. </p>
<p>Thumper…is the 401k withdrawal seen as “income from earnings” or is it looked at as money in savings?</p>
<p>I believe if the 401K was pretax…it is now viewed as taxable unearned income for the tax year. I’m not a tax expert…so I’m not really sure…but this premature withdrawal, I believe, is not only viewed as income, but the balance in the bank is an asset, I believe. Someone else will have to verify.</p>
<p>It is treated as income on the income tax return.</p>
<p>And with respect to the suggestion about taking a loan from the 401K, that wouldn’t have worked if her dad left the company – typically 401K loans are due to be repaid in full at the time you leave the company or very shortly thereafter. (Law may have changed on this, but this was the way this worked a few years ago.)</p>
<p>I would second the suggestion of visiting the F.A. office and talking with a financial aid counselor.</p>