<p>I'm an independent student with very few assets. So, college is looking to be a financial hardship for me. I applied to several liberal arts schools that meet need. </p>
<p>Colgate and Carleton both covered the vast majority of my expected expenses. Even schools with lesser reputations like NYU offered to cover the majority of my expected expenses. However, my top choice is Haverford. Haverford surprisingly only offered to assist with about half of my expected expenses. While this is still very generous, I wonder how they calculated my EFC to be so I high. I do have a 401k with about 65k in it (it is inherited). However, I am sure that I cannot access the funds without fines and penalties until I am 60. I assume Haverford may have taken this asset into account, but an expectations of 18k + work study + remaining costs 4k still seems a bit high. I assume this amount would not be reduced over the years if I cannot, in fact, take money from the retirement fund. Additionally, Haverford is the only school to have taken the IDOC. I wonder if there may have been an error on this form.</p>
<p>What should I do? Should I email and ask to find out if there was an error? Will they be able to explain to me if there is not? Handling the responsibilities of financial aid has been tough so I apologize if I am missing something.</p>
<p>The balance IN a 401 K account is not counted by the FAFSA or Profile formulas (so far as I know), but deposits made to those accounts in 2013 would be added back in as income. However, if this was a 401 k account that you inherited and was rolled over into a 401 K that is now in your name, it should not be included.</p>
<p>HOWEVER, when you were completing your CSS Profile or FAFSA, did YOU include this 401k balance in your assets?</p>
<p>Give Haverford a call. Explain that they are your top choice. Explain that you have significantly higher offers (which you would be happy to share with them) from Colgate and NYU, and Carleton (though somehow I don’t know if they will view Carleton as a “peer school”. Ask if they would be willing to review your financial aid award. Ask also, if it is possible that the 401 K balance was listed as an asset when your aid was calculated.</p>
<p>it is puzzling that Haverford calculated your expected contribution higher than Carleton or Colgate, as H generally meets full need and those are peer schools. Something doesn’t seem right to me. Do give them a call and find out exactly what the issue is. Explain to them that you have offers from those two schools and see if you can’t have a fin aid officer go over your package. Thumper is saying pretty much the same thing. That the 401K is treated differently by H over the other two schools is possible, as each school has its own methodology, but until you find out for sure, you really don’t know. There may be some other explanations here. I suspect there are.</p>
<p>Thank you both. I don’t think I would include that in the FAFSA but I had a relative fill out the IDOC and some profile materials so maybe a misunderstanding there? I hope so and not just a different formula. I’ll call tomorrow and see what they say. </p>
<p>Did you send something different to H than the other schools for IDOC or PROFIle? You can do a quick run on the NPC for H just to get some idea of what their estimates would be. Again, it’s possible that they do a whole other formula but that’s not something I 'd gotten wind of. H is usually pretty good and I would expect it to be consistent with Colgate.</p>
<p>If you inherited 401(k) funds, then there’s a good chance that you are not subject to the same withdrawal limitations as an original account owner would face. In other words, I don’t think that you would be subject to the “fines and penalties” that you mention if you were to access the funds before you reach retirement age. My educated guess is that the inherited 401(k) funds should rightly be considered an asset of yours that is available for your education.</p>
<p>Many factors determine exactly how a 401(k) beneficiary can and must make use of the inherited funds, including the relationship to the decedent, the ages of the beneficiary and the decedent at the time of the decedent’s death, and the rules of the plan. I would suggest asking Haverford’s FA office if they are including the 401(k) inheritance in your usable assets, and if the answer is “yes,” make sure you have a clear understanding of why they are doing this if other schools are not.</p>
<p>You were likely presented with distribution options when you inherited the 401(k). If so, what did you choose to do?</p>
<p>Congratulations on Havf…Carl & Colg. This is a huge problem with Liberal arts schools. Independent students get quite a sizeable loan plus work study in their package to meet the demonstrated needs, even with an EFC of 0. Is it worth it, when there are schools that will provide you with a “FULL RIDE” and you graduate debt free? That off-course is debatable.
It seems to me that majority of liberal arts school with “NOT SO MUCH ENDOWMENT” needs students that can actually afford paying their way through and less dependent on the school for aid. Certainly, we can’t blame them for that. Who knows it could be their way of saying “No” to students in a polite way. From a friends experience, Harvf might not offer any better than they originally sent you…not quite sure if it has something to do with your independent status or the school just waking up to reality that they can not afford to meet 100% of student needs as they did in the past…none of us were able to deceiver that issue last year.
That being said, any of those schools with full ride or the least loan possible would still be a great place for your undergraduate education. Carl has the most endowment per student population among the 3 schools you listed, and its going strong, so they can probably offer the most aid among the 3 schools, followed by Col, and Harf would be the least according to their endowment stats. In all I will say treat it as a business transaction because that is how these schools look at it anyway. Call them, explain your situation, ask for additional aid if possible, and make your decision based on the final data.
Best of luck.</p>
<p>PS…Haverford College, Oberlin College, Wellesley College etc receive a downgrade in credit rating from MOODY last year…SO that might go a long way to affirm my initial theory on why these schools are becoming less generous.</p>
<p>Not true. A few of the top Liberal arts schools do give generous financial aid packages with small or no loans such as Williams and Amherst (in my experience same as HYPS). They do all seem to calculate need differently. My D was offered a great package from Williams and Davidson but less aid from Swarthmore and Haverford. I’m sure there are others who may be the opposite. </p>
<p>The profile does ask for balances in retirement accounts. All the FA articles and documentation indicate that they are protected and not counted, but they must ask the question for a reason. My guess is that some profile schools deal with in a similar fashion to home equity. If the student or their parent’s retirement accounts contain an unusually large amount for the age of the owner they factor it in, perhaps changing the asset protection level for other assets. </p>
<p>That being said, the rules for inheriting a 401K vary depending on your age, the age of the person who owned the 401k when they passed away, and whether the person who owned the 401K was your spouse. If for instance the 401K owner was not your spouse, you are under the age of 59.5 and the owner of the 401K was older than 70.5, which means they had started to take minimum payments, then you must continue to take those minimum annual withdrawals. If you are under the age of 59.5 and the person who owned the 401k was younger than 70.5, the 401K should allow you to withdraw the full amount of the 401K within 5 years of the person’s death, or permit you to make annual withdrawals based on your life expectancy. </p>
<p>I am certainly not an expert, so you should check with the company that manages the 401K plan to see what options may be available to you. </p>
<p>Haverford would need to know that the 401K was inherited, but assuming they do, they may be expecting you to take advantage of these options.</p>
<p>@GTalum; certainly didn’t mean to generalize the issue. Just from my friends experience last year. Which I learned quite a bit from. I still do believe that the endowment shrinkage or lack of steady funding as in the past is making some of the colleges and universities consider their place in the list of colleges that meets 100% of demonstrated student needs. OP might get a revision from Harf but I doubt it will match what Carl and Col offered him. Students in the PA forum joke around that, if you did not get into U Penn, expect some sort of loan and work study or pay the balance out of pocket. Like I said earlier, we looked at so may variances why Havf, Swart, and other liberal arts colleges were pushing loans to students more than they did in previous years, and could not quite come to a resolution.
And I do agree, Berea College, William, Amherst, Bowdoin, Middlebury, Pomona, Grinnell, Carlton, etc. are exceptions, but their ENDOWMENT is steady and growing.</p>
<p>Well I called and it turns out to be the 401k. I reported the same 401k to every school, but Haverford was the only school to account for it. I can withdraw the money but the taxes and penalty are very significant. It looks like I will just need to look into loans and/or other schools. I almost wish I had diversified my choices a bit more. Thank you for the help.</p>
<p>You can only borrow from the 401k if you are an employee still working where you set up the 401k, and since this was inherited, I doubt that is an option. Some withdrawals for educational expenses do not incur the 10%, but still do count as income so can ding you at tax time. </p>
<p>Discuss the 401k with a tax adviser and see what your options are as rules for an inherited 401k are different than one through an employer, especially an employer you are still working for. </p>
<p>I don’t think that the money you inherited is still considered a 401(k). The government would prefer that the money be withdrawn so that it can be taxed (at normal income tax rates). Are you sure that you will incur penalties if you withdraw the money now? If that’s the case, it would be unusual, and would be a strong argument to make to Haverford that the money is not available for your use right now and should therefore not be treated as an available student asset.</p>
<p>@Richard: Yes diversifying application list is always the best plan. I had predicted the outcome with Havf based on a friends experience. I do not think its worth challenging any school on the aid package they offer. They all have their metrics and can not offer what they do not have. OP did his best by calling and @ that point if Havf was willing they could have found a way to get OP some additional funding otherwise, but they did not.
That being said, you still Carl and Col that offered you great award like you said. I would say go with the best “FIT & BALANCE” at this point, and avoid taking too much loans as much as you can, especially if you are going to be attending graduate school in 4 years.</p>
<p>You need to check on the required withdrawals from the 401k. Depending on the age of the person you inherited if from, you may need to take 1/5 of the account every year for the next 5. Sometimes if you don’t do that you forfeit the amount you were required to take. </p>
<p>I inherited a IRA. My mother was 82. I am required to take minimum distributions based on MY age. But I can withdraw more at any time with no penalties, just have to pay income tax. So I will probably borrow against that for S2 if necessary, then pay all loans off when the income will no longer affect EFC. That is my understanding of the situation anyway.</p>
<p>You can talk to H and ask if there is anything they can do to help you out here. Thank the admissions officer who admitted you, tell him/her the situation and ask what the best way is to approach this since H is your clear first choice but you may have to go to another school due to the aid differential. </p>
<p>I think you did fine in your choices and outcomes. There was really no way to have predicted this outcome. Both Cs are excellent, excellent schools, and many would pick Colgate over Haverford. IT’s often known as the "9th Ivy. </p>
<p>This is a another reason why ED could be an issue. You just never know what thing in a school’s particular PROFILE formula could be a sticking point I would not have guessed the aid from those three schools to be off by that much. But then how many kids have 401Ks? Probably no reflected in the NPCs. There was another student on these boards who could not come to closure with Swarthmore, a top aid giving school by any measure, if you research the records of schools and their financial aid figure. Would not budge, had to drop the ED accept and was sure that was it for the smaller schools, and Surprise! Carlton came through with an affordable package. The formula favored him. A niche situation where he was nailed at Swarthmore that Carlton decided to give him a green light. That’s why comparing offers can be important. Schools, even like ones, can be way off on aid formulas and outcomes on any individual situation. </p>
<p>And, yes, there are schools that use 401K balances if they fit a certain situation. Like if they are over a certain amount, if they are rollovers, if they are the student’s.</p>
<p>My admissions counselor was a really cool guy. I might e-mail, but I am sure it wouldn’t amount to anything because it is value that I have.</p>
<p>The account is really a 403b, if that makes a difference. Its like a 401k for a nonprofit. The person was well bellow retirement age. I am pretty sure that I would have to pay the 10% AND income taxes either way, but I can call and find out if there is an education exception or if I can make limited withdraws. </p>
<p>This is a good example against ED. I would have applied ED had I been able to interview earlier. Lucky I didn’t or I would have far fewer options. Vassar also just came through with financial aid and they have the same 18k expectation as Haverford. Thanks for the words of encouragement for Colgate and Carleton. They’re both just a bit far from home, but I hope I like them!</p>
<p>Both are phenomenol schools. I give Haverford a nudge up, but really Colgate has more name recognition. And for the difference in cost, even if I could squeeze it out, I wouldn’t go to H over either of the two. Only if money were of absolute no issue at all. And I’d pick either of the two over V as well. </p>
<p>Do ask. Let them know that Colgate and Carlton, both peer schools are willing to treat the 403b as a protected asset (as do most all schools in the country) and that though you will have to pick between those two, if they could do a similar package, you will absolutely go to Haverford. Worth a try. But really, I don’t think you’d lose out on education with either C school. The biggest draw H has over them is that it’s in Philly. </p>