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My ultimate answer is to cashflow school and pay as you go. It's easier than many people think.
That being said - if that isn't an option for you then do not use the 401(k) and here is why:
1) Aside from the taxes, you will pay a 10% penalty and lose the interest gained if it was still there.
2) Overall, that nets to an interest rate likely to be somewhere around 30%.
Would you borrow money at 30% interest to go to school? I think we all know the answer to that question.
With respect to your comments about no growth - something is wrong. The market has nearly doubled in the last year. Just having it in standard index funds would have netted you a gain of double what you had last year.
You need to make some adjustments in there right away.
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Don't sweat petty things....or pet sweaty things.
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