Personal Finance Retirement

How will my retirement savings affect my ability to get financial aid for grad school?

I have been working for almost 10 years and have been building my 401K since I started right out of college - now, I want to go back to graduate school, but I don't know if I'll be able to get any financial aid or favorably-priced student loans if I have retirement assets. Am I required to dip into this money as a first-dollar plan, or can I keep my retirement assets intact & still get financial assistance (even a Stafford loan)? Thanks!

Public Comments

1. Retirement accounts are *NOT* considered liquid assets. The definition of a liquid asset is something that you can quickly turn into cash without taking much, if any, loss. If you cash out your 401k or a retirement IRA before you are 59 and 1/2, the government is going to take 40% of it, period. This will not affect your ability to get financial aid. Now if you have something like, say a regular savings account with a large amount of money in it, or a money market fund, yeah, that could, if there's an income limit, prevent you from getting aid. Perhaps you need to contact the financial aid office and/or a broker and ask them about the laws concerning this just to be sure.
2. Retirement saving is a liquid asset. I would recommend to ask your school financial aid department or call State and Federal Departments to have a certain answer. In any case, keep your retirement assets because the cost (penalties and taxes) for earlier withdraw may be on the level of the assistance you are looking for.