<p>My mom lost her job in November 2011 due to a chronic back problem, she has been trying to get disability since.</p>
<p>My dad lost his job in March 2012 and has been unable to get a new one due to personal issues I'd rather not go into here.</p>
<p>Using my parent's tax estimates in the beginning of January, my EFC came to $3,151. Reasonable, though it would be tough for even that.</p>
<p>To stay afloat, both of my parents were forced to cash their 401k's. When I went back into FAFSA today to correct all info, I realized the 401k money had to be inserted, which put our AGI at over $100,000 and my EFC at just under $19,000. </p>
<p>To be clear, we cannot, in any circumstance, afford to pay $19,000. My parents still don't have jobs, and my mom doesn't even have her first disability hearing until mid-March. We are barely getting food into the house as is.</p>
<p>There is nowhere on the FAFSA form to put these circumstances!</p>
<p>What do I do from here?</p>
<p>Thanks.</p>
<p>It’s a rule that a 401k cash out is considered income. Nothing you can about that. </p>
<p>The only thing you can do is appeal to each school’s FA office.</p>
<p>You should definitely appeal to each college - ask about a special circumstances appeal. It may well be worth your time and effort.</p>
<p>You need to contact each of the financial aid offices and ask about special circumstances. What your parents may not realize is that not only did your EFC increase significantly, but their taxes are going to rise significantly as well. For the 401-k distribution to cause that much of a shift in your EFC, it had to be a considerable distribution (I’m guessing about $35,000?) They need to have someone knowledgeable assist them with their taxes - with $100,000 AGI, they are not eligible for many of the free tax assistance programs, though some may be willing to help anyway, if the situation is explained. That distribution is subject to a 10% penalty, on top of the income tax, unless it was used for certain expenses that meet specific exclusion rules. But you say it comes from a 401-k, and some of those exclusions apply only to money taken out of an IRA.</p>
<p>Unfortunately, your best solution may be to take a gap year, and start college a year later, when they don’t have such a high income in your base year. But first it would be best to ask for professional judgement from the colleges, to see if something can be done to help.</p>
<p>Financial aid offices take into account one-time income boosts such as 401k withdrawals and unusual bonuses. You just have to let them know.</p>
<p>May sometime take into account depending on the circumstances and school. Not an absolute by any means.</p>
<p>And even if they make an adjustment, it doesn’t guarantee an increase in aid. Each situation and each school is different. But DO contact the schools.</p>