It’s FAFSA time. Parents of college-bound teens and current college students are amping up to file this all-important financial aid document.
The sooner you complete the FAFSA, the better. When it comes to receiving financial aid, colleges disperse it based on the information they receive from the FAFSA. If you file late, all their aid may be dispersed to people who filed early.
Many parents turn to accountants for help, just as they do to file those pesky IRS forms. But, if you pay attention, read the questions carefully, and check for mistakes before you file, there’s really no reason why you can’t fill this form out yourself.
Here are 10 mistakes you should avoid:
1. Don’t leave any blank answers.
If the answer is zero, type “0” or N/A. If you leave blanks you might cause miscalculations and the form could be rejected.
2. Don’t enter the wrong income information.
Provide the federal income tax you paid or will pay based on your 2015 federal tax return – not the tax withholdings on you and your spouse’s W-2 forms (Note: If you don’t have your federal tax return ready yet, estimate using last year’s return. You can go back and file an update once your return is complete.)
3. Don’t wait to file the FAFSA until your taxes are done.
The sooner you get the form in, the sooner the colleges will be able to access the information and use it to determine financial aid. If you’ve filed your 1040 that’s great; but don’t wait until April 15 to complete the FAFSA.
4. Don’t forget to list the colleges.
On the FAFSA form, you can include up to 10 colleges that your college-bound teen has applied to. By doing this, the schools will get your information directly when the form is processed.
5. Don’t type a wrong Social Security or driver’s license number.
Check and recheck these numbers for accuracy.
6. List the most current marital status.
You need to state what your marital status is on the day you sign the FAFSA, whether you are married, separated, or divorced. This information can be tricky to determine if you don’t fall into the obvious categories. Read the instructions carefully and if you have questions, ask FAFSA representatives online or by phone.
7. Don’t inflate your education.
If parents didn’t actually graduate from college, don’t list “college” as the highest education attained. Plenty of colleges treat applicants more favorably if they are considered “first-generation” college students.
8. Don’t assume you won’t qualify for financial aid because of your home equity.
The FAFSA doesn’t even ask if you own a house so the amount of home equity is irrelevant. The FAFSA does ask about second homes or real estate investments, however.
9. Don’t make the assumption that your retirement will disqualify you for financial aid.
The FAFSA doesn’t have questions about retirement accounts. You can have hundreds of thousands stuffed away in retirement accounts and it won’t hurt your chances at getting financial aid. It does however ask about cash, savings, and checking accounts.
10. Don’t assume that your family income is too high to file the form.
Even though you might not qualify for need based aid, you should complete the FAFSA. Colleges use the FAFSA information to determine all kinds of aid, including merit-based aid (which is not based on need).
Don’t be afraid of the FAFSA. Start yours now. If you find you have made a mistake, you can always submit a correction online. The most important thing is to get it filed ASAP so that the colleges will get your information and have it when they are dispersing the awards.
[Looking for more info? Here's how divorce and separation can affect financial aid.]