Ten Common FAFSA Errors Parents Make

January is the month that millions of families disclose their financial data to the Department of Education through the Free Application for Federal Student Aid (FAFSA). Depending on the statistic you read, anywhere from 70-90% are submitted with errors. An error-filled FASFA will likely reduce the amount of aid you might receive. Given that the FAFSA has been called the gateway to financial aid, and considering the ever-increasing costs of college, it is imperative to minimize mistakes in completing it. Here are ten common FAFSA errors to avoid.

1. Failing to Submit Because of Income (High or Low)

Many times families will not complete or submit the FAFSA, believing that they make too much money to qualify, or they make less and think they will get everything covered because of income. Income is one of seven factors used to determine aid eligibility; always complete the FAFSA regardless of income.

2. Waiting Too Long to Submit

A mistake many make is to wait until they have all of their financial documents in place, and taxes done, before submitting their FAFSA. Since some money is on a first-come, first-served basis, it is imperative to submit as early in January as possible with estimates of your finances (which the Department of Education fully expects).

3. Submitting Incorrect Info for Divorced Parents

In a divorce situation, whose financial information is used? It is the income and assets of the household (including step-parent info) in which the students spends the majority of their time and receives the majority of financial support.

4. Understating Income

If you contribute to a 401(k), 403(b), or any other pre-tax retirement account, you must add back any contributions in the previous year to your income for FAFSA purposes. This in effect produces a higher FAFSA income than what might be shown on your tax return.

5. Overstating Assets

Many families mistakenly include retirement assets as part of their investments or net worth, when in fact retirement assets should not be included here.

6. Misquoting Real Estate Assets

Another common error is that families overstate their assets by including the equity they have in their primary residence. For FAFSA purposes, primary residence home equity is not included. However, equity in rental property and vacation homes can be included.

7. Misplacing Information

Always remember the FAFSA is written from a student perspective as if they are the one completing it. When the FAFSA refers to “you” and “yours,” it is in fact referring to the student.

8. Choosing to File Paper Vs. Electronic

Online submission provides built-in edits to help prevent errors, is more time-efficient, includes an online help feature, and offers a much simpler renewal process.

9. Failing to Consider Each Question Carefully

Give yourself time to think through the questions and what they are asking. Answering questions a certain way can preclude you from receiving aid or valuable information. The following two questions highlight this fact. When asked if you are interested in work-study, always answer yes. It does not mean you will get it, nor does it mean you have to take it. But what if the award is a great offer for the hours expected? When it asks for the student’s email address, always put your email address. This ensures that all information communicated to you or your student comes to you for review.

10. Forgetting to Save as You Go

Every page or two, be sure to save your file as you go. You don’t want to get halfway through just to find your computer or the government’s server has locked up.

And last but not least, I want to include the one mistake you definitely do not want to make. Please be sure to complete the correct FAFSA application. Remember to complete the FAFSA for the year your student will be in college for the upcoming fall school year, NOT the school year they are currently in. This is a huge, but common mistake. Make this one and your student will receive no aid in the following fall.


This article was written by Todd M. Kelly

Todd M. Kelly, MBA/CCPS, is a financial advisor with Summit Financial Group. He has spoken to thousands of people nationwide about financial topics including short-term and late-stage college planning. Co-founder of College Planning Relief, Mr. Kelly is one of the leading financial planners in his field. He can be reached at tkelly@summitgrp.com.


  1. sue goodin

    My son is a Junior at liberty university and is in ROTC and Nat’l Guard. Up until the fall sem. of 2011, we applied for the FAFSA. but this semester we didin’t. I was told that we can still apply for this year and it may help for this semester. Is this true?

  2. Monica Matthews, http://how2winscholarships.com

    I often see parents who assume they will not get any aid, so they don’t bother filing their FAFSA. Big mistake! Everyone should file regardless of income. These are great FAFSA tips, thanks! :)

  3. klpawl

    Re: the 401k contribution addition, does anyone know the source of that requirement? I went looking and the statute wasn’t that broad. it requires inclusion in income of contributions to IRAs and pensions, but not contributions to other retirement vehicles.

  4. Charles

    On the W2, box 3 Social Security Wages would includes pre-tax 401(k) contribution. However, that is not included on 1040 line 7 as indicated by the FASFA help documentation. So, I respectfully disagree with your item 4. Understating Income and went with the lower number as requested by FASFA. Please let me know if I missed some additional FASFA guidance that I was not able to find on the site. I do appreciate item 5. Overstating Assets, because I had to correct the inclusion of my retirement savings. Which is more consistent with not including that as income in my opinion. Thanks, Charles

  5. Elsie

    does having money in money market as retirement money count as income?

  6. Erika

    Can you apply for FAFSA now for a January 28th Semester?

  7. Gail

    Can you tell me on which line of the FAFSA to write the amount in the 529 college fund? Is it included in assets along with the checking and savings accounts?

  8. matt

    Yes, he is still eligible for a Pell grant as well as a fee waiver for the spring sem. of 2012. He may get it late, but better late than never, right?

  9. colleen

    Why fill out the FAFSA if you know you won’t get anything based on previous years. Year 1 and 2 all they offered was loans in our name (not the students) at a higher rate then a home equity loan, what is the benefit? If the loans were in my son’s name as they were when I was younger I could see the point to some extent because he would “own” the debt and it follows him. To keep filling out a form that is complicated and time consuming to borrow more expensive money well it doesn’t make sense to me.

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