AGI is high because of pension and annuities

On the tax forms I will be using to fill out my FAFSA and CSS Profile, my AGI is very high. However, almost half of the AGI is from money my parents took out of their retirement plan to pay bills. Their pensions and annuities are fully taxable, so my family’s taxable income and AGI are extremely high. I know that FAFSA probably will not take this into account when calculating my EFC, but will the CSS Profile? Also, do some schools allow you to explain this financial situation to them directly? I’m just scared because my family’s actual income is only half of our AGI, so our EFC from FAFSA is going to be ridiculously higher than what we can actually afford.


Your parents chose to use this retirement money to pay bills. It is therefore, income.

You can ask the colleges for a special circumstances consideration. You would need to prove that your parents had to take these withdrawals because of something like a job loss. And that these are a one time withdrawal of this sort. At some colleges, they will consider this. Others won’t.

Special circumstances considerations can be done at some Profile and some FAFSA schools. They are done on a case by case basis.

So…this was 2019 when these withdrawals took place, right (for the 2021-2022 financial aid forms)?

Why did they take this money out of these tax deferred accounts?

If they only took out a bunch of money in one year to payoff bills, their ‘income’ will go down the next year, so your financial need may increase.

Income from non-work sources is still income. However, if the withdrawals were loans against the accounts, that may be a reason to request a professional judgment review (from each school). They probably weren’t loans, though, if they were actually included in the AGI. If it was not a loan against the accounts, it still may be possible that schools would consider appropriate changes in a professional judgment review; it depends on the circumstances. I can think of situations where I might adjust the AGI to an amount that more accurately reflects actual family income. My suggestion is to ask schools to review your situation (after you file your FAFSA using actual numbers).

@thumper1 @kelsmom Thank you for the replies!

My father took out the money to pay our bills (he did call say he took out “loans”), and he has documentation that proves that all the money went to that. Also, my mother was on disability for years and became unemployed at the beginning of 2020, so she didn’t really have any income to help pay the bills (her Social Security benefits came very late).

I checked the financial aid website of my top-choice school, and it does say that they consider these special circumstances that can change financial aid estimates after I receive them. Do you think I would still qualify for these special circumstances?

Also, the estimated net price if they do not consider my special circumstances is $33,000 more than if they disregard the income taken from the retirement plan to pay bills. I plan on applying ED, and if my parents do not take out any money for bills in the future, then the college should be more than affordable. It’s just worrying me that this year is so much higher.

Make sure in your “top choice schools” list you also have something affordable if the schools do NOT decide to consider your case a special circumstance.

Don’t apply ED. You have significant financial constraints. You need to be able to compare net costs, and also you don’t need to spend time hoping for a special circumstances consideration from an ED school that might not give it.

You need some affordable options as well.

What IS your annual budget?

Are you really a competitive applicant for colleges that guarantee to meet full need for all? If so, maybe you should be looking at merit aid options that don’t consider your family finances.

@thumper1 My parent’s said they are willing to to pay a maximum of around $40,000 each year. As of running the net price calculator now, we would have to pay $50,000 my freshman year. However, my parents said they would be ok with paying $50,000 my first year if my price per year after freshman year goes down to $17,300 (based off of my family’s actual income on the net price calculator). This means that the qualification for special circumstances is not entirely necessary, but it would be much better.

I would say I’m a competitive applicant, and I plan on ED’ing to Duke. My sister will graduate the year I matriculate if I get in. I know sibling legacy is a thing at Duke, which I think would give me a real shot, but I feel as though I’m a competitive applicant without legacy. There was a post on CC that said the admit rate for ED (legacy) was 12% higher than the admit rate for ED (non-legacy).

Remember, Duke will be holistic, competition is fierce, and the kids who get a legacy bump are already considered highly qualified on their own Your whole app/supp will matter, having the right balance of ECs, the personal assets they’ll look for, etc. I don’t think we know what your ECs actually are.

When you say your sister will grad the year you matriculate, do you mean she will be done in the same calendar year, not a college sudent when you start? If so, did you run the NPC as “one student in college?” Same applies to the subsequent years.

From 50k to 17.3k is quite a drop. Are you comfortable telling us what the income is, without the dip into retirement monies?

You say it was a loan but I don’t think a loan from retirement funds would add to the AGI. Seems more likely they took a distribution if it’s showing up in the AGI. You might want to double check that you truly understand what happened. Then proceed as others have suggested.

@lookingforward I have been working on my application materials for about 3 months now, so I think my essays are decent. As for ECs, I have other threads (chance me’s and such) that outline my entire profile.

I did not count my sister as another dependent in college because she will no longer be at Duke when I start.

My 2019 AGI was nearly $200,000, but the actual income my parents received from work was only $100,000 (mother is recently unemployed and on disability). The rest was money taken out of my father’s retirement plan to pay our bills. None of the money was used for anything other than paying bills, and my father has documentation to prove that.

@riverandsasha3 - since your family already has a relationship with Duke, I would recommend contacting the financial aid office and talking this over with them in advance of applying ED. Some schools (unsure if Duke does it) will offer you a financial aid pre-read prior to submitting your application.

@politeperson You’re right. I actually think that it was a hardship withdrawal.

@coffeeat3 I actually emailed them today asking if my situation qualifies as special circumstances. The answer they provided was vague and basically said that I can ask for a review of other financial materials when I receive my financial aid package upon acceptance. On Duke’s website, it does say that they consider “one-time income” as a special circumstance (“withdrawal of retirement funds for emergency purposes”), so I have some hope. A clearer answer from a Duke officer would ease my worries, though.

Personal debt isn’t a consideration in FA calculations. It depends what sort of bills he paid.

If a parent pays off a substantial amount, it can reduce ordinary assets used to figure how much a family can afford for college. (Eg, using money in a bank account, reducing that balance…} Many do this.

But taking it out of an official retirement fund, (QRP/Qualified Retirment Plan,) which is meant to be preserved, not touched, (and is protected from FA calcs,) is a different situation.

So, depending on what he paid off with the retirement $$, you may still need “Special Circumstances.” Medical bills (not elective) are the classic example. Unlike other sorts of debt (often discretionary,) it’s usually beyond a family’s control. Likewise, a layoff. But some colleges assume that parent will find other work within some period.

A projection of 17.3k costs, if the family income returns to 100k, seems quite low. Maybe you have lots of siblings or ?

All this can spin your head. It certainly boggled my mind during my kids’ college years. But be careful you understand the way FA works, the terms that apply, check your original NPCcalcs that nothing was mis-entered, etc. And, if your family income is based on any self employment, the NPCs may not be accurate.


@lookingforward I do not think any of the distribution was used for things other than bills. I don’t know what qualifies this distribution as a special circumstance, but my father was the only one receiving an income from work. My mother was on disability and lost her job at the beginning of 2020. I don’t think my mother will be able to find another job, as she suffers from a life-long disability. I’m pretty sure the distribution was a hardship withdrawal.

I reran the NPCs with taking into consideration the minimum amount my parents have in assets, and it rose to $20,000. The reason it may be low is that my parents do not really have any assets. They don’t have any savings, and they have a very small amount in their checking accounts.

I agree with @blossom that you need to make sure that you apply to at least a couple of universities that you would be willing to attend, that you are confident that you will get accepted to, and that will be affordable. We were able to find schools that cost no more than $40,000 per year, and if you have stats that make you competitive for Duke you should be able to also.

I am finding myself wondering whether the pandemic will put other families in a similar situation where they had to make a hardship withdrawal to make ends meet, which puts them into a high EFC, which puts them in more financial difficulty. I would discuss this with the financial aid office at Duke, in addition to finding some more affordable schools to apply to.

Nonetheless, that 100k income most often yields a much higher family contribution. Over time, many posters at roughly that income level have reported higher actual costs via need based aid.

I agree with others, you’ll benefit in the long run from broadening your search, including colleges that are more affordable safeties, from the get-go. With the most- or highly-competitive colleges, nothing is assured, it’s important to adopt the right strategy. That’s less about personal wants (weather and so on) and more about ultimately gaining the right education leading to the right future. And not in massive debt, you or your family. As said, that can be accomplished in so many places, at so many good engineering programs.

It is imperative that you include colleges that have price tags that are comfortable for your family to pay. Though we were prepared to pay full sticker price for my kids’ colleges, and included some of the priciest private schools, we also made sure that some full ride possibility schools, guaranteed merit schools and low cost options were also in the mix.

Understand that a school can do pretty much as it pleases with its own money. Yes, the financial aid officer has leeway to designate certain exceptions to your case, but though that can mean guaranteed federal money, that comes down to subsidized Direct Loans and Work study in your case in amounts that are not sufficient and have no immediate impact on what you need. You can borrow without the subsidy and find jobs on your own. You are limited to $5500 as a freshman in loan amount.

For the fall 2021 school year, your parents’ 2019 income is what’s crucial. Your parents’2019 AGI is from The 2019 tax return is what determines a lot of your financial aid. That your parents invoked hardship provisions to get the money does not necessarily mean they get to exclude it from income for fin aid purposes anymore than they were allowed to do so for tax purposes. Doesn’t matter what you used the withdrawn money for, you still have to pay taxes on it. Maybe can deduct things like casualty and medical expenses, but simply paying accumulated bills due to other issues is not generally deductible, and not likely to get any exception for financial aid determination either.

That your mother lost her job in 2020, puts her in a position of being a displaced worker and could help reduce the impact of her 2019 earnings, especially if she is deemed disabled. That can change the a FAFSA Numbers but PROFILE schools use their own methodology and numbers. It comes down to each and every school as to how they assess your situation.

You have not been accepted to any school yet, certainly not Duke. If you apply ED there and if accepted, you can discuss that financial aid package they will present and you do not have to withdraw your other applications until you come to an affordable arrangement and accept the admissions offer. If Duke will not give you sufficient aid, you will know that it’s unlikely other schools will either,so having financially acceptable schools, like your state schools on the ready is going to be important. Some of such schools fill up seats fast, so get your applications to such alternatives early.

ITA with @cptofthehouse : apply to TWO rolling admission/ EA schools now that have your major and that you know you can afford. Afford means you can pay the listed tuition/R&B out of pocket OR you qualify for a auto merit award that makes it affordable. Use the fed loan and job money for living expenses.

Examples of the first: instate schools, maybe flagship, maybe directional
Examples of the second: Alabama, Arizona, Miami OH, New Mexico, Alabama - Huntsville

This means even before ED day, you KNOW you have the option of going to an affordable college next year, even if it’s not your first choice.

Do NOT wait until you have discussed an ED financial aid offer with Duke (and turned it down), to then start applying for these types of schools. A lot of merit money is handed out first come, first served; in addition, places on specialist programs often have a much earlier deadline eg December than general admission. You do not want to miss out on this.

I would spend much more time on finding these two early action/ rolling admission affordable schools than on trying to second guess what the Duke FA office will offer you.

Good luck