Avoid These Five Mistakes When Filing the FAFSAOct 07, 2022
Filling out the FAFSA for many families is daunting and stressful. It's nerve-wracking to disclose all your personal financial information on this form with the hopes that 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 leave to wonder if they filled out the form incorrectly. Unfortunately, making these few mistakes I have outlined here is precisely what harms the financial aid offered.
I will share with you some of the most common FAFSA mistakes I have seen in my counseling practice (and I've made as a parent filling out the FAFSA a few years back). I hope this helps you to avoid making the same mistakes that sometimes could cost you thousands of dollars.
Common FAFSA Mistakes (other than not submitting the FAFSA as this is indeed a mistake):
- Reporting assets that you are not required to report.
This is by far one of the biggest mistakes that I have seen. 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
Suppose you accidentally report a combination of these assets. That could be several hundred thousand dollars or more 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.
2. Including spouses/ex-spouse's income and assets when divorced or separated.
If you are divorced or separated and living in separate households, you only need to report your income and assets on the FAFSA. People often assume that because they filed a joint tax return in the prior year, they still must include their spouse's income. This is not the case. If you filed a joint tax return for the year reported on the FAFSA, 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, not your spouse's. If you use the retrieval tool, both incomes will be necessary, negatively impacting the financial aid offer. It's important to note that if you are divorced or separated but living in the same household, you need to report your spouse's/ex-spouse's income.
3. Accidentally adding 0 when reporting income or assets.
This happens often and can be detrimental to your financial aid offer. For example, instead of reporting that they have $5000 in their bank account, let's say the student 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 student's need-based financial aid being reduced by $10,000 vs. $1000! A significant difference, right?! Be careful. This is just one example; there are a lot of opportunities to add an extra 0 on the FAFSA accidentally. Triple-check all the numbers in the student and parent section before submitting the FAFSA.
4. 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 recalculate your expected family contribution to see if it will impact your financial aid offer. If you submitted the FAFSA to more than ten colleges, keep in mind you would need to submit these corrections to all the colleges. The best way to do this is to submit the FAFSA corrections to the first ten colleges, wait 72 hours for it to process, log back in, delete some colleges, add the other ones, and resubmit.
5. Not submitting the FAFSA because you don't think you will qualify for financial aid.
It is essential to submit a FAFSA even if you think you "make too much money" unless 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 specific institutional scholarships, and the income guidelines for these scholarships can be much more generous than the income guidelines for federal grants. Also, FAFSA must be completed for the student to borrow a low-interest federal direct student loan (not based on credit) and for a parent to borrow a parent PLUS loan. While that is not free money, these loans might help 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 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. A well-written financial aid appeal letter humbly asking for additional financial aid can go a long way.
The 23/24 FAFSA opens(ed) on October 1st. Please check your college's priority filing deadlines and get the FAFSA submitted before your first ED/EA due date. It's best to complete your FAFSA in October and not wait until spring (sometimes amendments can be made if there are sudden changes in circumstances). Don't worry about rushing to fill it out as soon as it gets released because the first week it opens, the website is glitchy and tends to crash a lot. You will save yourself a lot of frustration by waiting a week or two.
Follow me on Facebook @VoicED or @College Admission Mastermind, a free private group for parents for free financial aid-related information, college news, and resources. In addition, suppose you have general financial aid questions or questions about my programs and services that can help you successfully navigate the process of financial assistance and maximize your financial aid offers. In that case, I offer a free initial 40-minute consult call/zoom that you can book directly on my calendar. https://calendly.com/voiced_academy/college-consulting
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