Cashing in 401K;will need student loans

  1. Hopefully someone can provide some info...
    I have credit card debt I want to pay off, so I'm thinking of cashing in my 401K, roughly 24K after the taxes are taken out. I will hopefully be attending nursing school (wherever accepts me) and KNOW I will need to take out student loans. I have a degree (in Psychology) and will be wanting to get a second degree, BSN maybe entry level MSN. Does anyone know if cashing in my 401K this year will prevent me from getting student loans?
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  2. 4 Comments

  3. by   CuriousMe
    I'm assuming you're speaking of Federal Student Loans?

    There are two different kinds of Stafford Loans, subsidized and unsubsidized. The Fed Govt. pays the interest while you're in school for the subsidized loans, the interest accrues while you're in school. for unsubsidized.

    There is a spot on the FASFA to enter in how much money you have in the bank, but I don't know how much money you're allowed to have and still get subsidized loans.

    Peace,
    Cathie
  4. by   Mommycakers
    Quote from nathanielandarianna
    Hopefully someone can provide some info...
    I have credit card debt I want to pay off, so I'm thinking of cashing in my 401K, roughly 24K after the taxes are taken out. I will hopefully be attending nursing school (wherever accepts me) and KNOW I will need to take out student loans. I have a degree (in Psychology) and will be wanting to get a second degree, BSN maybe entry level MSN. Does anyone know if cashing in my 401K this year will prevent me from getting student loans?
    Please do not cash out your 401k. Check out bankrate.com or msn.com and use their money calculators for savings. You are going to lose about 40% of your total invested money. You will have to pay taxes on the money you cash out early and then you will be hit with an additional 10% penalty. This should be your absolute last resort. I plugging in just your figure of 24K assuming a 10% rate of return at least for a period of 20 years and your 24K would be over 175K. That is a lot of money to give up. I know you mentioned the 24K was after taxes so you would be giving up even more than the 175K.

    Look into getting loans for school and make up a budget. Try to bring in whatever you can extra to help pay down your credit cards before nursing school starts. Good Luck.
  5. by   llg
    Don't forget ... You'll also have to pay a 10% penalty for taking the money out early from your 401K. That's in addition to the taxes.

    It's rarely a good idea to take money out for expenses such as the ones you name.
  6. by   Rianna1
    Hi All,
    Thanks for your input. We have many expenses that I cannot keep up with. I know my last resort should be the 401K; I just have to hope that I can still attend nursing school and pay all the bills I will definitely look into school loans. Anyone know the amounts of loans FAFSA and Sallie Mae give out? Last year our EFC was $10,000. I had applied just to apply. I have a BA in Psychology. I'm looking into going to a private school.

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