Jan 19, 2011

FAFSA Filing Mistakes You Can Easily Avoid

Even with the vastly improved FAFSA form, there’s no question that providing all the information required of financial aid applicants is challenging. But don’t let that stop you! Procrastination is a clear enemy in this process and may prevent you from taking full advantage of the government’s generosity.

The fact is that federal student financial assistance programs represent the nation’s largest source of federal financial aid for postsecondary students. In 2010, the feds processed over 21 million Free Applications for Federal Student Aid (FAFSA’s), resulting in the delivery of approximately $134 billion in aid to over 14 million students and their families.

This year, the government expects to award even more in student aid based on information provided on FAFSA forms filed between now and June 30th. Yet according to an annual study completed by Sallie Mae and Gallup, 28 percent of families with college-bound students never got around to completing the form last year. Of those who didn’t complete the FAFSA, half of them either didn’t think they would qualify for federal aid or were unaware of the FAFSA.

And over a third reported they didn’t need financial aid. Didn’t need financial aid?

Don’t be in this group. The best way to complete the FAFSA is early and online. But making mistakes on the form can delay your application and possibly result in lost financial aid.

To help get you started, here a few costly FAFSA filing mistakes you can easily avoid:

  • Waiting to complete your taxes. Although it’s preferable to have completed tax returns available before starting, sometimes that’s just not possible especially if your employer is one of many who routinely ignore W-2 deadlines. Waiting for your employer’s bookkeeper can cause you to miss priority state and college filing deadlines, and these delays could cause you to lose aid. So go ahead and provide estimated information and plan to update once your taxes are done. (HINT: Use your last pay stub from 2010 to provide an income estimate).

  • Leaving a blank field. The most frequent mistake made by applicants is leaving a field blank. If the answer is zero or the question does not apply to you, write in a “0.” If you leave a question blank, the processor assumes you forgot to answer, and too many blanks may cause miscalculation or an application rejection.

  • Entering the wrong legal name. Make sure that when you register for a PIN number, the name you provide matches what it says on your social security card. If you’re JoAnne for the Social Security Administration, don’t suddenly become Joann for FAFSA. The same goes for Bubba or Billy Bob. And don’t forget the hyphen or drop one of your last names just because your parents are no longer together. The FAFSA verifies this information with the Social Security Administration and if names do not match, there will be delays in processing.

  • Providing an incorrect Social Security number or Date of Birth. Check and double check every number you enter in these fields. Errors can be as simple as reversing digits or entering a parent’s SSN in place of the student’s. This REALLY slows down the process. No aid will be awarded until all numbers are correct and match what the feds already have in the system.

  • Leaving the question about drug-related offenses blank. If you’re unsure or embarrassed, contact the Information Center instead of leaving this field blank. A conviction doesn’t necessarily disqualify you from getting aid.

  • Entering the wrong tax amount paid. Use the 1040 federal tax return for reporting taxes paid. Do NOT use your W-2 form for this purpose. NOTE: The online FAFSA will have a new tool in place that links the FAFSA to information provided to the IRS on previously-filed tax returns. This should help, but in the meantime take extreme care not to enter taxes withheld instead of taxes paid.

  • Confusing Adjusted Gross Income with Gross Income. The FAFSA specifies the line on the 1040 that lists your AGI. If you use the gross income figure, you are over-reporting your income and you could lose aid eligibility because of a high income. Again, the new partnership with the IRS should help, provided you file your return before you start completing the FAFSA.

  • Failing to sign the FAFSA form. This sounds like a “duh” moment, but you’d be surprised how many manage to screw this up. If you’re one of the 2 percent filling out the paper FAFSA, be sure to sign it. If you’re filing electronically, be sure to obtain your PIN before starting the FAFSA. Your PIN is your electronic signature, and both student and parent will need to have one to file online.

  • Forgetting to update tax information. If you submit the FAFSA before filing your taxes, you will have to estimate income and tax information. Once your taxes are complete (by April 15th), you must amend your Student Aid Report (SAR) by going to the corrections page on the FAFSA website. Do this as soon as possible, as over- and underestimating taxes can affect the amount of aid you receive, and colleges will not finalize your aid package until you’ve provided 2011 tax information.

  • Missing filing dates. Financial aid is given out on a first come first serve basis. Those who submit the FAFSA early and correctly are placed in the front of the line for aid. In the way of a reminder, the FAFSA website provides a list of known state filing deadlines. But since priority filing dates vary significantly by college, you’ll need to check with individual financial aid offices to get specific deadlines.

  • Listing only your top school on the FAFSA form. List all the schools to which you have applied. Gaming this question can lead to problems later. Yes, you’re showing your hand but sometimes that can work to your advantage particularly if you are applying to a list of schools that typically competes for the same students. You don’t want to miss a priority filing deadline because of a desire to maintain privacy about your college list.

  • Neglecting to coordinate related financial aid forms. These forms include CSS PROFILE, Institutional, or Verification forms. They ask for much of the same information as the FAFSA, but are filed separately. The key is to be consistent on all the forms. Colleges will compare answers and any discrepancies could result in lost aid.

  • Not filing the FAFSA because you think you don’t qualify. Way too many families make this mistake. Why? Sometimes families don’t realize that retirement and home equity are excluded. Or they think they simply make too much money. A little known fact is some colleges make scholarships available contingent on filing the FAFSA. And finally, stuff happens. Life can take unexpected turns, and you’re much better off having a FAFSA form on file in case an unexpected emergency changes your financial situation.

You can learn more about federal student aid by downloading Funding Education Beyond High School. If you have specific questions, check the FAQ section on the FAFSA website or contact the Federal Student Aid Information Center. Remember that delays and errors can be costly!

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