Paying for College

[Nomad 6,563]

Asking for a friend... If you had a 401K and could withdraw without penalty do you think this would be a good time to take some out to pay for college?  It's up high right now and he is  thinking of taking enough out to pay for the first two years of college just in case it crashes.  At least the first two years will be taken care of with some of the earnings.    Interested in hearing some thoughts on this.  

Edited January 13 by Nomad

[electric10162 2,594]

Personally, I would leave the retirement and take out a home equity line of credit. 

[mvl30 118]

Why bother. According to Biden and the Democrats college is going to be free.

[20a 28]

Not related to your question but, a tip... you can take a good amount of the gen ed credits at community college online. The classes are easier and much cheaper!! 
 

This way you can take 12 credits per semester at the 4 year school, and the addtl 3 at the CC. Take another CC course over the winter and summer and you can either finish early or relax your senior year  

Edited January 13 by 20a

[KBfishing 2,025]

21 minutes ago, mvl30 said:

Why bother. According to Biden and the Democrats college is going to be free.

And up to 50k in student loan forgiveness

Edited January 13 by KBfishing

[MGHunter66 7,630]

Keep the 401k intact, take out a student loan. 

[not on the rug 3,981]

I wouldn't touch the 401k.  Tell your "friend" to see what financial aid packages are available, and then have said "friend" pay what he can and assist with the loan repayment process.

Your "friend" is too close to actual retirement age to recoup what he will be taking out and with things as they are, I have zero faith in the economy and market right now, so we're probably all about to lose money anyway.  

 

[Herd Buck 148]

You don’t have to actually take it out, you can just sell 2 years worth of tuition inside your 401k and leave it in the money market fund inside your account. That way you know you have the cash for the tuition but you don’t pay taxes until you actually take it out and use it in the future. The money continues to earn some interest (not a lot right now) but with that portion you don’t have to worry about the market ups and downs. 
 

Though no penalty, whatever you take gets added to your income and you pay higher income taxes on everything you earn that year not just on what you take from the 401k... better to spread it out over several years vs all in one. 
 

Just an option for you. 

[Kype 3,386]

trades is where the money is.  yes you work harder but nothing wrong with that. HVAC, electrican, plumber, carpenter. big money to be made these days as the college degree people get more lazy. 

yes this is off topic to your question and im sorry, but i had to say it.

[Tarhunt 10,540]

Tell him to go into the military. 

[Nomad 6,563]

10 minutes ago, Tarhunt said:

Tell him to go into the military. 

He has his application in for Army ROTC.

[OldMenRule 336]

1 hour ago, Nomad said:

Asking for a friend... If you had a 401K and could withdraw without penalty do you think this would be a good time to take some out to pay for college?  It's up high right now and he is  thinking of taking enough out to pay for the first two years of college just in case it crashes.  At least the first two years will be taken care of with some of the earnings.    Interested in hearing some thoughts on this.  

I put aside money for both my sons education. One is currently in college and the other will be in a year. I insisted that they both take out loans for their education and when they graduate I'll give them their funds and they can do what they want with it. 

Truth is ( as mentioned on this post ) the fiscal flood gates are wide open and I can envision a future time when there will be student loan forgiveness. Perhaps a trickle at first but given the pandering nature of our political class I can see full forgiveness. It's Monopoly money, spend away.

As an aside I guided my one son to a smaller state school and will do the same for my other. I saw no need for them to go away and rack up thousands for the same education provided nearby. I care little if my children indulge in the " college experience " it's life's experience that will get them further.  

[Nomad 6,563]

1 hour ago, electric10162 said:

Personally, I would leave the retirement and take out a home equity line of credit. 

He gets a pension, the 401K is just extra savings.

[Nomad 6,563]

1 hour ago, not on the rug said:

I wouldn't touch the 401k.  Tell your "friend" to see what financial aid packages are available, and then have said "friend" pay what he can and assist with the loan repayment process.

Your "friend" is too close to actual retirement age to recoup what he will be taking out and with things as they are, I have zero faith in the economy and market right now, so we're probably all about to lose money anyway.  

 

He has a pension the 401K is just additional savings.

[electric10162 2,594]

4 minutes ago, Nomad said:

He gets a pension, the 401K is just extra savings.

The problem is.....once you take out the money it's gone forever unless you can borrow against it. An old friend used to tell me....save your cash and assets...use someone else's money and borrow.