<p>We ran the NPC under two scenarios: 1. including our emergency IRA distribution in our income, and 2. excluding the distribution. The results are absolutely startling. Under scenario #1, we are eligible for only $2k in loans. That’s the total of the FA. Under scenario #2, we are eligible for lots of FA, including grants and work study, with an EFC of about $9k.</p>
<p>This is frightening. It’s clear that the distribution changed our entire eligibility. That distribution WILL NOT be part of our income in the year we have to pay the tuition. So it is clear that we have to focus on our special circumstances and get them to exclude the distribution. </p>
<p>Any advice from the FA experts on this board? </p>
<p>Re: loans…all freshmen can take a $5500 Direct Loan by completing the FAFSA. </p>
<p>Regardless…I think an ED application should not be done. It doesn’t give the school any time to consider your special circumstances…if they agree to do so (done on a case by case basis).</p>
<p>Remember too…you are self employed, and the net price calculators are not accuracy for self employed parents.</p>
<p>Your kiddo needs to cast a wide net. Your situation is one where your net prices could vary significantly from college to college…and if the money is a serious consideration (it sounds like it is), the ability to compare multiple offers would be an advantage.</p>
<p>So, tell me how this works: If we file CSS (let’s just say he does ED – maybe he won’t, but just for argument’s sake) on Nov 1, it will be with 2013 figures. Based on that, the EFC will be roughly $9,000. Yay. But then when we fill out the real figures after we file 2014 taxes, the EFC will come out much higher. How do the colleges address that? </p>
<p>Friends of ours took a large retirement/severance distribution, putting it directly into starting a business to be the family’s mainstay one year. They had a kid in college and another graduating and applying. They could not get an accommodation for the one time distribution. so the kids took gap years. They ended up saving quite a bit of money doing that as the kids got financial aid that way–two in college, full need met schools. IT was a huge difference as income is the main factor in what the calculators come up with for what you are expected to pay.</p>
<p>CSS Profile will ask about family income in 2013, 2014 and even in 2015 with 2014 carefully estimated income being the most important. There is a special circumstances section where you can explain that IRA withdrawals were to cover specific hardship expenses and these money are gone (and will not be available for college tuition).</p>
<p>It will be at the discretion of the Finaid officer to remove IRA distributions (Line 15b of form 1040) from your AGI for finaid calculations. I do know that when I grossly overpaid state taxes and ended up with additions on Line 10 the following year and inflated AGI - this amount was removed from consideration by Finaid office.</p>
<p>Ok. I called the FA office. They said that they could deduct the distribution from AGI. Obviously they did not promise. But the guy I spoke to seemed pretty confident when I explained the situation. In other words, a worst-case scenario would have been if he said something like, “sorry, we have to count everything, no exceptions,” or if he said, “I can’t tell you until I see the whole Profile.” But he didn’t say anything like that at all. He was very ENCOURAGING, not discouraging. </p>
<p>So here’s my question: how much can I rely on what he said? What are the chances that they can just say, oops sorry ha ha the guy on the phone didn’t know what he was saying. Too bad. </p>
<p>My take: you can’t rely on it at all. It’s one guy saying something over the phone. Until you submit the forms and get an official award letter, it doesn’t matter. Saying they can do something and actually doing it are two different things.</p>
<p>Then why do they even have people available to answer questions? Why say things that are meaningless? I am trying to figure out what their agenda would be with that. </p>
<p>Also, nothing signed, but they do record the calls. </p>
<p>When our office has similar situations, we do often deduct the distribution from the AGI - as long as there was proof that the money was used for an extenuating circumstance (i.e. job loss, medical expenses). I would hope the school would be true to their word, but who knows if that staff member will be the one who handles the special circumstance request. </p>
<p>You asked for opinions and I gave mine. Was the guy you talked to the director of financial aid or a student intern? I don’t know. Did he just want to make you happy and get on to his next task, or was he providing an honest assessment based on years of experience? I don’t know. Without answers to those and other possible questions, I categorize the reliability of his information as unknown, and therefore I wouldn’t rely on it.</p>
<p>Plus remember. If this is considered a special circumstances consideration…they are handled on a case by case situation…meaning all are not granted. </p>
<p>Personally, I don’t think you should do ED. If you go on ahead and do so, then you can let the finanical aid office know if and when your child gets the acceptance and estimated package, exactly what the situation is with the IRA withdrawal and say you need something in writing that the withdrawal will be subtracted from your AGI because of the difference it will make in the actual aid package, That it will make the difference of being able to afford the school or not. Copy to Admissions as well and then stay on top of fin aid until you get something in writing exempting the IRA withdrawal. </p>
<p>If you got the name of the guy who gave you the heads up, email him , go over the circumstances again and ask if he’ll email you how this will be handled. You might want to look up who he is too. He could be a student aide, he could be an assistant aid officer. Big difference as to how much his word counts. </p>
<p>There have been cases where IRA or 401K withdrawals were forgiven in professional judgement, and cases where they have not THere is no telling what will happen here. My friend went two for two with her college kids where their schools wouldn’t do it. Neither school would exclude the withdrawals. So her kids took gap years. That also might be something to consider if you can’t get the schools to budge.</p>
<p>You asked what the school normally does, or what it might do, and he told you. However, he has no idea if YOU are telling the truth, that you really used all the money for a business and not a trip to Vegas, to pay off old loans, to pay for a wedding. Schools can only guarantee the financial aid at the final decision making process.</p>
<p>It is no different than the ‘chancing’ threads. Most kids with a 2400 and 3.9 and 10 amazing EC will get into most colleges, but it is of little consolation when your child is the 1 in 100 who doesn’t.</p>
<p>All you can do it file the paperwork and wait for the results.</p>