On the verge of tears right now... might not be able to go through with Cornell ED

Cornell has a thing that if the family income is less than $60k, then the student has to pay like $2000 a year. I thought this would be me, as my family income is $48k. However, apparently our 401K factors into the situation and increases my parents’ income to above $60k. But we haven’t even used our 401K, my parents are only 50 years old. Now, I’m expected to have a tuition around $13k… I don’t know what to do. What should I do? This feels so unfair. I’m only a student, my parents barely speak English so I’ve had to do a majority of the financial aid information. I’m lost, please help.

Your family contributions to their 401K are added back in to calculate your income. It sounds like your parents are contributing 12K per year to the 401K (60-48). If this is not the case, you may have done the forms wrong. Retirement balances are not usually considered.

You could contribute 5,500 from the federal direct loan program. Your summer earnings might be another 2000 or so? And would your parents be willing to reduce their contribution to the 401K by half while you are in college?

The contributions your parents made to their 401k accounts in 2016 are added back in as income…because really…they WERE income…and your parents elected to have the money put into tax deferred retirement accounts.

So…if their contributions exceeded the amount that would take them over $60,000 in earnings…then yes…you might not qualify for this generous need based aid.

You can either wait and see…or you can call Cornell and have your application changed to a regular decision application.

If you have submitted your FAFSA and Profile to Cornell, maybe just wait and see.

Hopefully you have other applications submitted for regular decision consideration.

If the money isn’t enough in your need based aid package, then you can decline the ED acceptance.

@AroundHere Thank you so much for the response. We have 16K contributed to our 401k, so our income should be around 64K. My EFC is 7500, as well. According to the net price calculator, $13k is my net price, and $7.5k is my total tuition after student loans and work study.

@AroundHere I can get a summer job and do work study. Also, when you say “retirement balances are not usually considered”, does that not mean the 401k?

Congratulations on your Cornell ED acceptance. Your situation is what it is. Try to focus on figuring out how to fund your EFC.

@motherpugger

The balance IN your 401k retirement accounts are NOT counted as assets on the FAFSA form. I believe the Profile asks for those, but those amounts are not included in the need based financial aid calculation.

The CONTRIBUTIONS your parents made in 2016 are added back in as income on both the fafsa and Profile forms…and the Cornell Net Price Calculator would have done so as well. Those contributions are income…that your parents CHOSE to put into the deferred retirement accounts. For financial aid purposes, they are still viewed as income for that year…in this case 2016.

Did you already receive an acceptance and financial aid package from Cornell? If so, did it include $5500 in Direct Loans?

What @thumper1 said -

Everything that your family put in the 401(k) account during or before 2015 is not counted as a resource to pay for college, but the contributions to the 401(k) during the year 2016 are considered part of the 2016 income.

@AroundHere @thumper1 Ok thank you so much. I just feel so stupid for assuming a much lower financial package. The Financial aid decision is not released yet, will be in a few days. With a 7500 efc, can I be eligible for work study? I guess I will have to work very often to pay off my loans.

Also, sorry for asking so much. I feel lost because my parents don’t really understand it (and neither does my counselor!). I don’t want to blame them – I love them, I’m just extremely overwhelmed as of right now.

Just wait and see. At this point, you don’t know what your package even IS. The financial aid package also uses a cost of attendance that includes things like books and transportation…things you have price control over.

Once you get your package, see how much of your billable costs are covered…your tuition, fees, room, board costs.

Do you have the ability to work now…babysitting or a small part time job? Can your parents pay their family contribution at all?

@thumper1 Yes! I’ll get a job at a local CVS or Wawa, anything to help.

Thank you so much. This is my dream school and I guess I’ll have to work for it! Not a big deal, just gotta take a breather n calm down.

Cornell wants kids to be able to attend. When you get your award, feel free to ask the financial aid office any and all questions you may have about your net price was calculated and to ask for additional aid if you can document that you truly need it.

You will be ok. The reason that the 401k contributions are included in income is that your parents could choose to use it to pay tuition instead of contributing to retirement. Perhaps they might lower their contributions while you are in school and use the rest to pay part of your tuition? $13k is a nice price for Cornell, so ask questions and explore all options!

@motherpugger Your attitude is very commendable. Although you are in a difficult situation, your motivation is very inspiring. I’m sure you will do very well at Cornell and succeed later in life.

Call Cornell’s FA office and explain this to them. They’re known to be pretty flexible. They don’t want students breaking the ED contract and they promised to meet 100% of demonstrated need

@motherpugger just wait and see what offer you get from financial aid before calling them. They are friendly people and will listen when and if you do call. They aren’t going to ask for your retirement savings, I assure you. But even if you can’t work it out, it’s very easy to get out of the ED agreement. It’s in their fine print that your are not obligated if financial aid does not meet need. You literally tell them you can’t afford it and the agreement is nullified.

Do call the FA office, but call tomorrow, as Thursday is the last day of exams. I do not know the work schedule for non-academic offices, but the students are clearing out already.

Congratulations on your acceptance to Cornell! You have a very mature attitude. Speak with the FA office when you get your award. They want you to attend.

Follow through on getting a job. I worked 35+ hours per week in college while being in a fraternity, playing intermural sports, and having a relationship. It can be done!

@AroundHere @thumper1 OK, I got my financial aid package! This is my situation though. My father is unemployed and lacks a 401K. My mother, who had the 401K, recently lost her job. She got a new one, but her income is less and she does not have a 401k because her workplace is much smaller. So for the 2018-2019 school year, shouldn’t that factor in at all?