The idea of filling out the FAFSA for many families is daunting and stressful. It’s nerve-wracking disclosing all your personal financial information on this form with the hopes you will get enough financial aid to cover most college costs. Unfortunately, many students and families are shell shocked when they receive their financial aid offers and left to wonder if they filled out the form incorrectly. In some cases, this is exactly what happened and has a negative impact on the financial aid offer.
I’m going to share with you some of the most common FAFSA mistakes I have seen in my 30+ years working in the field to help you avoid making the same mistakes that in some cases could cost you thousands of dollars.
Common FAFSA Mistakes
- Including spouses/ex spouse’s income and assets when divorced or separated.
If you are divorced or separated living in separate households then you only need to report your income and assets on the FAFSA. Oftentimes, people assume because they filed a joint tax return in the prior year that they still must include their spouse’s income. This is not the case. If you filed a joint tax return for the year that is being reported on the FAFSA then you should manually input your tax information instead of using the IRS data retrieval tool. You only need to report your portion of the income and taxes and not your spouses. If you use the retrieval tool it will important both of your incomes which will have a negative impact on the financial aid offer. It’s important to note that if you are divorced or separated but living in the same household then you do need to report your spouse’s/ex-spouse’s income.
- Reporting assets that you are not required to report
This is by far one of the biggest mistakes that I see. There are several protected assets that you are not required to report on the FAFSA. They are as follows:
- The total value of your retirement accounts
- The total value of the primary home you live in
- Your business value if you have less than 100 employees
If you accidentally report a combination of these assets, that could be several hundred thousand dollars, or more being factored into your expected family contribution and hugely impact your financial aid offer. Be sure not to include any of these assets when filling out the FAFSA.
- Accidentally adding an additional 0 when reporting income or assets.
This happens often and can be detrimental when it comes to your financial aid offer. Let’s say the student, instead of reporting that they have $5000 in their bank account accidentally reports $50000, that’s a HUGE difference. The government expects that students can contribute 20% of the money in their bank accounts towards their education for the year so this little mistake would result in a students need based financial aid being reduced by $10,000 vs. $1000! Significant difference, right?! Be careful. This is just one example, there are a lot of opportunities to accidentally add an extra 0 on the FAFSA. Triple check all the numbers in both the student and parent’s section prior to submitting the FAFSA.
- Not making a FAFSA correction when you realize you made a mistake.
You can go in and correct your FAFSA as many times as you need to and resubmit it. When you do that, all the colleges listed on your form will be notified of the change and then will recalculate your expected family contribution to see if it will have any impact on your financial aid offer. If you submitted the FAFSA to more than 10 colleges, keep in mind you will need to submit these corrections to all the colleges. The best way to do this is to submit the FAFSA corrections to the first 10 colleges, wait 72 hours for it to process then log back in, delete some colleges and add the other ones then resubmit.
- Not submitting the FAFSA because you don’t think you will qualify for any financial aid.
It is so important to submit a FAFSA even if you think you “make too much money” unless of course you have $200-$300k just sitting in a bank account that is earmarked for your or your child’s education. Some colleges use FAFSA information to award certain institutional scholarships and the income guidelines in place for these scholarships can be much more generous than the income guidelines are for federal grants. Additionally, for the student to borrow a low interest federal direct student loan (that is not based on credit) and for a parent to borrow a parent PLUS loan, a FAFSA must be completed. While that is not free money, these loans might be useful in helping you pay for college. Lastly and most importantly, if you don’t fill out a FAFSA you can not appeal your financial aid offers because you won’t receive an offer without completing a FAFSA. I recommend every student/family appeal. 80% of students who do this will receive additional financial aid and they don’t necessarily have to have special circumstances for this to happen. Colleges want to help students if they can, and some colleges have access to more endowment money than others and a well written financial aid appeal letter humbly asking for additional financial aid can go a long way.
The 23/24 FAFSA opens on October 1st. It’s important to check your colleges priority filing deadlines and get the FAFSA submitted prior to that date. It’s best to get your FAFSA completed in October. Don’t worry about rushing to fill it out as soon as it gets released because the first week it opens the website is very glitchy and tends to crash a lot. You will save yourself a lot of frustration by waiting a week or two.
Don’t make these common mistakes that can negatively impact your financial aid offers.
Be sure to follow me on YouTube for free financial aid related information and resources. If you have general financial aid questions or questions about my programs and services that can help you successfully navigate the financial aid process and maximize your financial aid offers, I offer a free initial 10-minute consult call that you can book directly through my website, thefafsaguru.com.