Avoid These Common FAFSA Mistakes
As a result, filling it out correctly is vital. It can be overwhelming, so use this checklist to avoid some of the most common FAFSA mistakes. (If you need more assistance, er, hand holding… you can watch our FAFSA walk-through that will provide more information AND peace of mind.)
1. Not Filing FAFSA at All
The biggest mistake is not to do the FAFSA at all. When you complete the form fully and correctly, you put your student in the best position to receive much-needed financial aid!
Many parents don’t file FAFSA because they assume they won’t qualify for need-based aid.
This can be a mistake because depending on your financial need and the financial aid policies of a school, families may qualify for some financial assistance.
Families need to remember that filing the FAFSA gives them access to federal student loans and the option for parents to borrow the Parent PLUS loan.
If your student doesn’t file FAFSA, they won’t be able to borrow Direct Student loans, which are probably the only loans students can borrow that don’t require a cosigner and are solely in their name. The Direct loans also offer the lowest interest rates for student loans without a cosigner.
Another reason for filing the FAFSA is that some colleges won’t offer merit scholarships to a student who hasn’t submitted a FAFSA.
Though I don’t know if the rationale for requiring this is the same at all schools, I’ve been told that colleges want to confirm that a student is not eligible for needs-based aid before granting merit-based scholarships.
2. Mixing Up Parent and Student Financial Info
Like many forms, the FAFSA can jump around a lot. One moment you’re filling in your income and assets, and the next few questions then ask about your student’s financial details.
Getting these confused can cost you a lot of money.
Student assets are counted more highly (roughly 20%) than parent financials (which are counted at about 5.64%.) Getting them backward can mean a big jump in your EFC and a huge blow to your financial aid.
3. Disclosing Unneeded Financial Information
On the FAFSA, some financial information is not counted. As a result, you don’t need to include these assets in your calculations.
If you do include them, you could end up reporting erroneous information on the FAFSA and getting the wrong EFC and financial aid as a result.
Here are the financials that parents often mistakenly include:
- The value of retirement accounts (including 401K, 403B, 457, IRA, SEP, SIMPLE, and more)
- The cash value of life insurance or annuities
- The value of your home
- Business assets if you have less than 100 employees
You do have to list your annual qualified plan contributions under untaxed income. You also need to include the equity value of investment properties, and received rent does count as income.
Keep in mind that the financial information you need to disclose on the FAFSA is different from that on the CSS or other school forms. Individual colleges may request retirement accounts, value of your home, and more to make their own calculation of your financial need.
4. Making Careless Mistakes
There are a lot of careless mistakes that families make. Sometimes these affect the financial results for your family, and sometimes they cause weeks of delays in processing.
Here are some of the careless mistakes that are common:
- Using the parent’s FSA ID to log in and fill out the FAFSA. The parent’s ID is only used to sign the form. The student’s FSA ID should be used to fill out the FAFSA. Parents can also start the FAFSA using the student’s name, date of birth and SSN. The student will eventually have to use their FSA Id to sign it before submitting.
- Typos – including mistyped birthdates and the wrong numbers in the social security number.
- Not hitting submit – if you simply close the browser, you’ve lost all your hard work!
- Reporting the wrong numbers from your tax form – if you don’t read carefully, you can enter numbers from the wrong lines.
- Using nicknames like “Johnny” instead of “John.” The name won’t match the social security number and the form won’t be processed.
- Reporting income from the wrong parent if the parents are divorced
It’s important to do the FAFSA when you’re fully alert and prepared.
Avoid working on it when you’re tired, have a short time until another appointment, or are distracted. In fact, you may want to get a financial professional to look it over and make sure it’s all correct.
5. Not Accepting All Aid
You know the box that says, “Do you want to be considered for work-study and loans?” The answer is always YES!
You are not obligated to accept work-study or loans if they are offered as part of a financial aid package. However, if you check no, you may not get the aid you’re looking for.
It’s vital to be open to any and all aid. You can decide what to accept and what to turn down once the offer is actually made.
6. Missing Priority Deadlines
It’s common for families to get confused when facing a lot of different deadlines. There are application deadlines for the colleges, there are deadlines for private scholarships, and there are deadlines for the FAFSA.
If you want the best aid, it’s important to be first in line when it comes to submitting your FAFSA. Look up the “priority deadline” and make sure you submit by that date. Aid requests that are later may not receive as much assistance.
A lot of schools give money on a first come, first serve basis. You can’t afford to miss out by being late!
7. Not Following Up On Financial Aid
You should make sure the FAFSA lists every school that your child is applying to. They all need the FAFSA so that they can make a financial aid offer.
Once you send the information in, follow up with the school to make sure they received it. Don’t assume – it only takes a few minutes to call and be sure.
Knowing where to apply is another important part of the equation. You want schools that are the most likely to give out aid. Looking for help pinpointing those schools? Click here to find the schools that will be more generous with their money.
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