CARES act retirement plan distribution effect on FAFSA/PELL grant

[ExGingi]

I took some CARES act distributions in 2020, figuring I can use it as an interest free loan with a 3-year repayment schedule.

However, when I applied for FAFSA for my daughter it was counted as income, even though it wasn't taxed as it is being repaid, killing the PELL grant eligibility.

Did anyone deal with this and resolve successfully?

[bubkiz]

Assuming it was listed on your tax return?

Depending on the school, you may to able to ask for professional judgment to have it removed from the calculation.
An important tip to note is that is any parent received unemployment in 2020 or 2021 they can request to have the entire income of that parent removed form the calculation though professional judgment.