Hi cc! Long time lurker & couldn’t find many answers for specific issue so I figured why not hop on. If this is in in the wrong place please direct me to the right forum.
I’m a gap year former homeschooler who recently got into my favorite state college with less than impressive stats,21 ACT, 3.4 GPA). Paying for it is gonna result in some hungry nights,(5950 EFC, damn you FAFSA), but I’ve had a job since I was 17 so there’s thousands in savings & the retail chain I work for has a location not 15 minutes from campus. I understand I’m not extremely smart & my family sure isn’t rich so I’ve applied to as many outside scholarships as I could find & intend to try & apply to be an RA my sophomore year along with working while going full time. Any debt I rack up I want to be my responsibility & I’m looking at the full 27,000 in federal at least.
But my dad is intent on dipping into his 401K & helping me pay tuition. I’ve told him not to, I don’t think its a good idea cause like I said we’re not rich and they still have my 15 year old sister to raise & he’s almost 50 & my mom doesn’t have an actual contributing job. My mom says he feel guilty & I understand that, I mean he bought a brand new Dodge Charger two years ago without telling anyone, just brought it home & that was when me & my sister didn’t even have schoolbooks. He also has a history with cash loan places to fill in financial gaps & he’s just overall messed up any savings that he and my mom, and even my older and younger siblings and I ever had. I get it, he messed up and he’s just now realizing it, but that doesn’t mean he has to ruin he & my moms retirement. I think they deserve to be as comfortable as possible in their old age.
I have communicated all this to my mom & even more to him, I’ve even said he can just help pay for an apartment for me and I’ll roommate with my best friend & I’ll go to a community college, but he’s NOT BUDGING. He loves the university I could attend & is already fantasizing about the football games we could go to. Can any of you guys give me ANY advice with this? How would you want your child to handle this? The man is getting me stressed out even before school!
It is your parents responsibility to handle their finances. It is your responsibility to communicate clearly and directly what you hope they will be able to contribute to your college costs, and your plan for paying the rest. You should not feel guilty if your parents decide to contribute more than you believe they should. If it really bothers you, tell them you will accept their help, but only as a loan and that you will repay them in time as you get your feet under you.
You actually sound like an amazing young man already wise beyond your years. If this is how you came off to the college you were accepted by, no wonder they let you in. Hitting hardcore adulthood issues at your age is tough.
It sounds like your dad has impulse control issues which can bankrupt a family. He sounds a bit like my brother in law. I think you are right to resist his using his 401k. Any withdrawal at his age is not tax free. So the taxman will take a cut. If he eats it up now you may end up needing to support your parents in the future, possibly at a time when you are trying to raise your own family.
It appears you are dealing with several issues with him - guilt for his habit of impulse spending and male ego/manhood issues - he wants to provide for you his son when he really does not have the money; his self esteem is very tied up in that. Plus he is clearly very proud and excited by your achievement and loves you very much.
You clearly are over 18. One option that may work is to argue that you are now an adult man and you want to try to do this for yourself. Let him know that you appreciate all he has done and is willing to do but you need to take care of this for yourself. Agree to let him help in the future if an emergency arises. Remind him that he should be proud of the self-reliant man you have become due to his efforts. But that you are an adult now and will handle this.
If your only younger sibling is now 15, it would make more sense for your mom to get a paying job (if she is able to work), than for your dad to take money out of his retirement. You can see that your dad has a history of making some very poor financial decisions in the past. Do your best to stop him from making another one that will affect his/your mom’s retirement. Not sure how you can do this, but just say NO and talk to your mom about it, and maybe your mom will be able to get through to him that borrowing from his retirement is a terrible idea. You might have to point out that he is, as you said, “fantasizing” about the college/football games–probably like he was fantasizing about the new car he bought, but couldn’t really afford. He needs to face reality.
He should NOT dip into his 401k savings…for any reason! Perhaps he isn’t aware that this is one of the few assets protected in case of, God forbid, bankruptcy…
You may want to point out to him that by using his retirement now he may be inadvertently placing the burden of his care on you in the future…
Your instincts are perfect. It is a disastrous financial decision to dip into 401k funds for short-term expenditures. The whole “theory” of 401k’s is that the money in there is a reserve that benefits from long-term compounded growth. Taking money out destroys the momentum and controverts the purpose of having a 401k in the first place.
You seem very thoughtful and mature for your age. It is good that your father wants to help. His judgment is not very good, but in this case, he may be right. Even if it is for the wrong reason.
Honestly, as I look at this situation, my top concern is that you are successful in school. That is the most Important thing. If you can use the extra time to get good grades and identify a major that you like that leads to a good job, that would be worth his investment many times over.
If you think that is a possibility, you should consider it.
Take the money, pay your expenses and use whatever financial aid you get to build up a bank account that you can hand over to dad when he needs it. Any fin aid funds are not included in the calculations for future fin aid, so it can so accumulate.
Yeah, cp is right. Your dad will find one or another way to blow his 401k money. Better it is effectively transferred to you, so you can repay him by saving it up, and keeping it until in your view he needs it (like 20 years from now).
Your dad is 50. There is normally a 10% penalty for early withdrawal of 401(k) before age 59 1/2. Plus taxes. Many plans withhold 20% for taxes. So if he withdraws $30,000 to help you, you will only get $20,000. He will lose $3,000 for the penalty and $6,000 initially in taxes.
@goldensrock Actually I’m a woman , my dad and I connect over sports more than he & my older brother do so that’s why he’s excited for football. And yeah I’m 19.
And to cape for my dad here it’s not ego it really isn’t, he just wants to take care of us, I mean he didn’t even want me to get a job. He’s just overprotective
And let me pose a question to you all, I’m majoring in PR & the median entry level salary is about 38-45K , do you think that this is a good base salary so if I do pay him back I can straight out of college? I’m going to intern too of course.
Well I am totally and completely busted - got caught gender stereotyping! You are right it was the love of football that lead me to think you were male. It is still a possible ego issue- the need to protect and take care of his daughter. That is actually a much harder nut to crack for a whole bunch of complicated reasons. I will let you know if I actually have a useful suggestion.
You can actually dip into your IRA to pay for college tuition without penalty, but would need to pay income tax on it. http://www.irs.gov/publications/p970/ch09.html
You can borrow against your 401K, which isn’t the worst thing in the world if you can pay it back. You can’t borrow against your IRA.
@ Nothinspecial If you are able to find a $40k job right out of college, I think that would be a big success.
Honestly, focus less on repaying him, and more on what you can do to maximize your chance to graduate and to get the most out of your time there, so that you are employable when you are done. That is worth many times what your father is putting in. Put effort into your classes, get involved in clubs and activities, develop connections with other students, get a research position, find an internship. It is doing the extras and taking full advantage of the environment that you are in that makes the most difference.
The percentage of students with an ACT of 21 who do not complete their degree is significant. However, your grades have been solid and your level of effort and mindset may well be the deciding factor. Decide that you are going to give it your best effort from the beginning and you will have more than repaid your father.
I know that is probably hard for you to see, but trust me. Those few thousand dollars will not really make a big difference in his life. However, if you are able to put that extra free time to good use, then it may make a big difference in yours. Go for it, and do your best to make the most of it.
@goldensrock haha! You’re fine, and yeah he’s stubborn as a bull. Doesn’t help I’m the first female in his family to go to college. My older brother was the first period.
@nothinspecial, what state are you in and how much money are you talking about per year? We’re NYS homeschoolers. Our eldest is your age and we’re not rich either, so I feel your pain. If you’re full pay at the state school, going to the cc for 2 years then transferring may help you avoid a chunk of debt.
What is your net cost (tuition + room/board, & fees) - grants?
Sounds like plenty of good advice from other parents here.
Regarding the football games issue. I sure hope you can also tell your Dad you will be with friends and NOT him for those. No way should you let him expect to be involved at all in your college life. If he is set on attending you school’s games he needs to do it independently of you. You need to draw not only financial lines but social life ones as well.
@austinmshauri I live in Louisiana & the school is about 15K a year, $7200 for tuition, $8000 for room and board though that would be practically free if I became an RA. Books & living expenses can be paid for with what savings I have and working part time. All in all its not a ton of debt even if I don’t get any scholarships THIS year. I plan on looking for any subsequent scholarships as I go. But from lurking around here it looks like the COA for my school is less than tuition of others…
@wis75 No, that won’t be a problem. The school is an hour and a half away & he works on weekends sometimes, he won’t be down that often. But even if he was there a lot I wouldn’t mind, my dad worked a lot when I was a kid and I never really spent much time with him so I’d love to go to games with him
, my dad and I connect over sports more than he & my older brother do so that’s why he’s excited for football. And yeah I’m 19.