Hi, so I’m currently hoping to apply for QuestBridge match in the fall and I had two quick questions about the financials.
How do they factor in money that is in savings? Specifically, my family income is on the lower end of their spectrum but we do have money in savings (not enough to pay for college but my parent is saving for a house). I know that there is a way to move the money to a retirement account so they can’t factor it, or something similar to that, but that would add more constraint.
Are there non-custodial parent income waivers? Based on the requirements to get a waiver for college financial aid, I would qualify, but I don’t know if it is offered for QB.
Thank you for any insight.
There is an annual limit on what your parents can put in retirement accounts per year.
There is a financial penalty and sometimes a tax obligation for early withdrawals...so it’s not like they can decide to put the money in a retirement account this year and take it out in the near future with no financial ramifications.
@thumper1 I heard this from a college counselor, I know it is difficult to reach afterward and causes a deduction of assets in the transfer which is why we’re trying to avoid it… That being said if it’s counted as money that I have and therefore would have to pay in tuition the ramifications may be less. My parent is going to talk to people with a lot more knowledge, but for now, we’re just wondering how it would factor in with Questbridge since they have specifics with the income we’re wondering if they have specifics for savings:)
It all depends. On the type of retirement account, the time involved, and many other factors. Not enough information here to provide any meaningful response.
With a 401k, the contribution cap Was 18500/year; most have the ability to do a withdrawal for the first home purchase. It does count as income when you take it out, if you write it off when it is added to the account (which is usually the case). Typically, if you are still with the employer who sponsored the 401k, you cannot make early withdrawals outside of hardship withdrawals or loans, but I have seen some companies that allow for education withdrawals.
With a Traditional IRA the cap was 5500/year, and the penalties and tax (10% & 20%) apply for withdrawals.
With a Roth IRA if it has been open for 5 years, you can withdraw the principle without penalty (since you’ve already paid tax on it when you put it in), but if you withdraw earnings you will get the same penalties and taxes as above with the Traditional IRA.
Thank you for your helpful information! My parent is definitely talking to professionals about it, I was just wondering almost more in regards to College Prep Scholars because any changes made wouldn’t be finished by that point. I think income is low enough that it will be okay. I just have the two factors (Non-Custodial Parent & Savings) where if they counted those I may not qualify.