<prompt> Human: Short version: Lost my job 3 months ago. Credit card debt has been accumulating, now totaling 7,000 over the past 18 months. Had a 401k plan that says if I cash out now, Ill get 22,000 of my 31,000 more than I thought after penalties. I have a wife and 3 kids. We are living with my parents for free as long as we want. I am 30. Long version: Worked 4 years at a job in a very high cost city, living as cheaply as possible, thinking we could live paycheck to paycheck just a little longer until I got a better job that allowed us to finally start saving. Better job never happened, my job ended, and now weve moved back home to a low cost-of-living state where we can live for free with my parents while I find a new job. Our credit card debt started adding in up in the last year after we had to move to a new place that was slightly cheaper but the utility costs were hundreds of dollars a month more than we were expecting old drafty house, ugh. So where we were just scraping by before, we started running a balance month to month over the past 18 months and it has snowballed to 7k, our recent cross country move costing about 3k of that. One of my biggest concerns is the recent decline of my previously excellent credit score. In in January of 2017 it was in the low 760s Excellent and it has gone down to 721 Good as of today. The different creditwise, credit karma, etc. each showing a general decline in the past year dropping a few points each month since we had to start only paying off the minimum payment of our credit card. I assume the longer I keep this growing balance, the faster the score will drop. We are thrifty by nature and upbringing and I know the best thing is to put as much into your 401k as your company will matchallow and to never think about using the money. And I didnt at first. But now that its been a few months without any real income My wife works a little job that brings in a few hundred dollars a month, thats basically paying for food and student loancredit card minimum right now that 22k is looking really tempting. Ive heard you only get a small fraction of your 401k if you cash it out early, so I was surprised when their letter said Id get 22k of my vested 31k. Does that seem correct and will I be kicking myself when were 70 and this money could have grown a lot? Our current plan is for me to apply to a masters program in my field and get an actually well-paying job 3 years from now If I am accepted, I would start in Fall of 2019 and its a 2 year program. Before you say More school wont solve your problem!, I know why youd say that but I also know this program well and its incredibly cheap and known for placing its graduates in great jobs. I would never consider a typical gradschool as the debt is not worth the benefit. After scholarships and several other advantages, the total cost of my program will only be around 6k for tuition and wed live free with my parents the whole time. So I am currently looking for any old job with insurance for just the next year until I would start my masters program. So my big question is, am I crazy to tap into this money now when we really need it rather than leaving it be until retirement? I do expect to be working a good job in 3 years from now where I would start a new 401k and heavily invest in it to make up for the lost 4 years. And if so, how does all that work? Does the retirement company just send a check? All at once? Do they give you the whole amount and you are required to pay the penalties when you file your taxes the next year? Or do they only give you the 22k and the rest is withheld? And, could I avoid the early withdrawal penalties if I used the money to pay for grad school? How do they confirm Ill use it for gradschool? Does it have to only cover tuition, do I have to be accepted first? Ill only need about 6k of it for tuition. Would love to pay off my remaining undergraduate debt too, about 11k, that we are fine paying 140 a month right now. Its a fed loan so the interest is not that bad, and I understand there are disadvantages to paying it off too quickly, but Ive never understood that strategic debt stuff. So please be kind, the past six months have been really hard on me and my family and Ive never had a good grasp of grown up finances like investing, retirement planning, and compound interest-type stuff. Thanks for reading. 401k Statement:  <response>: Theres no education exception for 401k. IRAs, yes. That said, Im skeptical of your plan. Youre talking about going into pretty substantial debt, wiping clean your retirement, and starting a new career with a full family in tow. This reads like a pretty classic education scam to me as you alluded to but dismissed. 3 years is a very very long time with a family of 5 to be living on scraps. 35 years old is kind of old to be entering a new field. 3 years is a long time for a relationship to survive this level of financial stress. Maybe you werent looking to hear that, but my suggestion is to look for a job and get back in the black. 