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Suppose you don't contribute to a 401k in prior and prior-prior years of FAFSA filing and:

Total Cost of College is $60,000
Expected Family Contribution is $50,000
Financial Need = $10,000

Do you think the formula or the college admissions office will alter the EFC or finanical aid offer if you instead contributed $18,000 to your 401k in those years.


I think the EFC will go up as your fed taxes paid go down -- by about 25% of your contribution, so 18,000*.25 = $4,500. And if you're in the 25% marginal rate you'd save that same amount in reduced Fed taxes. So, that would almost be a wash (though you'd shelter more money for future FAFSA application years by moving assets to 401k). I'm curious if the college might go further and reduce any scholarships/grants/aid if they see that you are able to contribute full or part of your financial need amount into your 401k every year. I'm about to embark on the first of 10 years of FAFSA/CSS forms for my 3 kids and would like to continue to contribute to my 401k but I fear it might hurt me more than it helps me in the end.

Any thoughts are appreciated.


Any ideas?
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