Your 401k plans, IRAs, Keoghs and other qualified retirement savings are excluded when your Expected Financial Contribution* (EFC) is calculated using either FAFSA or PROFILE methods.
Saving for your retirement should be an important priority, and it makes sense that this portion of your financial pie is not “supposed to” pay for your child’s education. In reality, many parents end up dipping into retirement savings to help pay for college.
* Expected Family Contribution (EFC)
The Expected Family Contribution (EFC) is how much money your family is expected to contribute to your college education for one year.
Typically, the lower your EFC, the more financial aid you will receive. Factors such as family size, number of family members in college, family savings, and current earnings (information you provide on the FAFSA) are used to calculate this figure.