FAFSA Mistakes to Avoid
If you’re headed to college this fall, one of the most important tests you’ll take happens before you even set foot on campus. It involves answering more than 100 questions on the federal college financial aid application to determine whether you are eligible to receive financial aid.
The stakes are high. More than 41 million people owe more than $1.2 trillion in student debt, according to the Consumer Financial Protection Bureau. That's unlikely to be a group you want to join so getting as much aid as possible is critical. The Free Application for Federal Student Aid (FAFSA) determines your eligibility for federal aid as well as money from states, colleges, and many scholarship programs.
Before you fill out the form, you’ll need to gather your latest tax returns, bank statements, and investment records. You'll also need a FAFSA ID, which takes about three days to get after you apply.
When filling out the application, you need to be careful not to make mistakes. Making FAFSA mistakes can delay the processing time and getting even one question wrong may cost you thousands of dollars in financial aid, says David Levy, editor at Edvisors, a website on planning for and paying for college.
The FAFSA quizzes you on everything from the number of people in your household (which can be trickier to figure out than you may think) to your parents’ net worth (a wrong answer here could reduce the amount of aid you receive).
You can reduce FAFSA mistakes and answer fewer questions by filling out the form online. That’s because the online version uses “skip logic” so you only see the questions that apply to you. You can also cut down on mistakes by using the IRS retrieval tool on the site, which automatically imports information from your tax returns.
Mistakes That Can Delay Processing
Some simple FAFSA mistakes will hold up your application, says Levy. Among the most frequent:
Not filling in the blanks. Don’t leave a field empty. If the entry is zero, put in "0."
Not counting yourself. You must include yourself in your household size, even if you didn’t live with your parents in the prior year (for example, if you lived in the school dorm).
Failing to sign on the dotted line. You are not the only one who must sign the application. Your parents must too.
Confusing parent and student information. When the FAFSA asks for information about “you,” it means you the student, not the parent.
Mistakes That Can Be Costly
Other FAFSA mistakes can be more costly and can affect how much aid you receive, says Mark Kantrowitz, publisher and vice president of strategy for Cappex.com, a website that helps students find financial aid for college. The most frequent:
Overstating income and assets. Qualified retirement accounts (401ks, 403b and IRAs) and the value of your home should not be included in any savings and investments you list. Reporting that information may reduce the amount of aid you receive. If your parents are divorced or separated, you only need to include the income, savings and investments from the parent you live with primarily. But if you have a stepparent, her financial information must be included too.
Incorrectly reporting your dependency status. Even if you pay your own bills or live separately from your parents and file your own taxes, you may still be considered a dependent and have to provide your parents’ financial information. But there are a number of exceptions, including if you’re married, are over the age of 24 or are considered active duty in the military.
For many students, the biggest mistake is not applying for financial aid at all, says Kantrowitz. Each year, more than two million students who would have qualified for federal grants or state and institutional aid don’t apply, he says.
Some students mistakenly believe that their family earns too much to qualify for financial aid, even though there is no income cut-off. Or they think they’ve missed the deadline. For the coming school year, you could have applied as early as January 1. The sooner you apply the better because some aid is given on a first-come, first served basis. You can file a FAFSA until the end of the school year in which you have enrolled. For the upcoming 2016-2017 school year, you can apply for financial aid through the end of June 2017.
If you need help, contact the Department of Education's Federal Student Aid Information Center's hotline, 800-433-3243 or visit the Website of the Office of Federal Student Aid.
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