Feb 11, 2015

Costly FAFSA mistakes you REALLY want to avoid

Even with its many improvements, the FAFSA can be challenging for some families to complete accurately and in plenty of time for colleges to consider.

Knowing this, the feds have thoughtfully provided a series of YouTube videos as well as lots of detailed explanations in FAFSA FAQ’s and throughout the Federal Student Aid Website.

And families are finally getting the message about the importance of getting a baseline FAFSA on file before the start of freshman year, regardless of income level. According to a recent report  from Sallie Mae, FAFSA completion jumped from only 72 percent in 2010 to 81 percent in 2014.

And it’s not just about federal aid.  Some colleges and private scholarship foundations require FAFSA completion for students to receive merit aid as well.

So what’s the best way to maximize your potential for aid?

Complete the FAFSA early and online.

To combat some of the more common FAFSA mistakes, online applicants are now given the option of retrieving IRS data to automatically populate sections of the form. 

This option simplifies the application process, helps reduce errors, and may lower chances of being selected for verification. It’s great if you’ve already filed your taxes, but not so good if you haven’t and shouldn’t be used as a delaying tactic.

To help you get started, here a few costly FAFSA filing mistakes you can easily avoid:
  • Waiting to complete your taxes. Although it’s preferable to have tax returns filed before starting, sometimes it’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 2014 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 “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 exactly matches what it says on your social security card. If you’re Susan for the Social Security Administration, don’t suddenly become Susie 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.
  • Using commas or decimal points in numeric fields.  Save yourself some grief and always round to the nearest dollar.
  • Having the wrong parent complete the form. When parents are divorced or separated, you need to make sure the right one completes the form. The parent responsible for filling out the FAFSA will be the one with whom the student has lived for most of the year (more than 50 percent).
  • 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.  And note that if your parents do not have Social Security numbers, list 000-00-0000—do not make up a number or include a Taxpayer Identification Number.
  • Failing to count yourself as a member of the household. The student for whom the FAFSA is being completed must be counted as a member of the household. Also keep in mind that the form is all about the student, and the words “you” and “your” always refer to the student—not the parents.
  • 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, but you will need to complete an eligibility worksheet.
  • Failing to report stepparent’s financial information.  If your parents are divorced, your stepparent’s financial information must be reported in addition to that of your custodial parent.
  • Entering the wrong tax amount paid. Use the 1040 federal tax return for income and reporting taxes paid. Do NOT use your W-2 form for this purpose. This is where the new IRS data retrieval tool may help you avoid errors.
  • Neglecting to register with the Selective Service.  If you are a male, aged 18-26, you must register with the Selective Service.  Failure to register will make you ineligible federal student aid.
  • 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 less than 2 percent filling out the paper FAFSA, be sure to sign it. If you’re filing electronically, use your PIN.
  • 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 (hopefully 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 2014 tax information.
  • Missing deadlines. 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.
  • Filing the wrong FAFSA.  Depending on the time of year you are completing the FAFSA, there may be two different FAFSA’s available.  If you are seeking aid for the 2015-16 award year (July 1, 2015 through June 30, 2016), you must submit a 2015-16 FAFSA.  If you are planning to take summer classes, ask your college’s financial aid office which FAFSA you should complete.
  • Trying to game your college list.  Yes, we all agree this requirement is bad.  But to maximize your aid potential, you should list all the schools to which you have applied. 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. Note that the order in which you list these schools does send a message.  You can either send a signal to your top college by listing it first, or you can choose to walk the middle ground by alphabetizing your list of schools.
  • Neglecting to coordinate related 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. Again, some colleges make merit scholarships 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.
  • Deliberately providing misinformation.  It’s never a good idea to lie to the federal government. 
You can learn more about federal student aid by downloading Funding Your Education. 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!

No comments:

Post a Comment