(MoneyWatch) This is the time of year when millions of parents and students are grappling with
financial aid forms. It's also the time of year when many families make
financial aid mistakes.
Here are eight mistakes to avoid when completing the
Free Application for Federal Student Aid (FAFSA), which families must fill out to be eligible to get financial assistance at thousands of schools, and the
CSS/Financial Aid PROFILE, which approximately 20 percent of private institutions use.
1. Procrastinating. There
is no federal deadline to submit the FAFSA, but state financial aid
programs and colleges do impose aid deadlines. Check with schools on
your child's list to see what their deadlines are, as well as your state
aid program. You can find a link to every state's financial aid
programs at the website of the
National Association of Student Financial Aid Administrators.
A
growing number of states offer aid on a first-come, first-served basis.
It's OK if you have to submit your aid application with estimated tax
information. You can use the
IRS data retrieval tool to update the FAFSA after you've completed your taxes.
2. Failing to check for errors. When a parent or student makes mistakes on a
financial aid form, it's highly likely that the household won't generate the right "
expected family contribution."
The information that a family shares on the FAFSA and the PROFILE
calculates their EFC, which is a dollar figure that represents the
minimum amount that a family can expect to pay for one year of school.
This might seem like a no-brainer, but parents don't always bother to correct
FAFSA mistakes
even when it can hurt them financially. Last year, more than 750,000
students notified about FAFSA errors by the U.S. Department of Education
failed to revise their aid applications, which potentially cost them
money.
3. Including retirement assets. Don't include retirement assets on your
FAFSA.
I wish the aid application was clearer on this point. The FAFSA only
wants you to divulge your non-retirement assets. If you include your IRA
or 401(k) assets on the FAFSA, it could squash your chances for
need-based aid.
4. Providing the wrong tax figures. Parents
should list the federal income tax that they paid or will pay based on
their 2012 federal tax return -- not the tax withholdings on their W-2
forms. The advice is the same for the students themselves.
5. Avoid blank answers. If
the answer to a question is zero or not applicable, write "0" or "Not
Applicable" on the online form. Leaving blank answers can cause
miscalculations.
6. Don't inflate your education. Some
institutions will award applicants brownie points if they are
first-generation college students. If parents didn't graduate from
college, select "high school" as the highest education attainment.
7. Failing to seek help. If
you are overwhelmed by the process, seek help. You'll learn where you
can turn for assistance by clicking on my recent post on
FAFSA resources.
8. Failing to appeal a financial aid award. Schools
don't broadcast this fact, but it is possible to successfully appeal
disappointing financial aid awards. If the aid package your child
receives is underwhelming, you can ask a college to reconsider the
award. Just don't approach the school and announce that you want to
"negotiate." Be diplomatic.
The previous posts (even though they are dated) still contain valuable information.
this summer about a couple that graduated from Harvard with no debt and earned $100,000 in scholarship money! They have a great story and have written other