<p>No different than if you got a bonus check and chucked it in the savings account. The amount of the bonus would be income, and if it was in your savings or checking account on the day you did FAFSA, it would also be savings.</p>
<p>Time to take a year out and work? Because next year the FAFSA could look very different</p>
<p>As far as taking out a loan from a 401k, this might not have been possible if all loans came due at the time the father lost his job. However, there would have still been other options. For example, the 401k could have been rolled over to an IRA, and a loan taken from that. We don’t know the OP’s father’s specific situation, but this is a cautionary tale for anyone looking at liquidating a 401k prior to retirement.</p>