Applying for financial aid is a critical step in making college affordable, but the process is complex and full of potential missteps. Simple mistakes on financial aid applications — such as the FAFSA or CSS Profile — can easily lead to delayed aid or, worse, cause students to lose out on significant savings. The following guide highlights the top 10 most common errors applicants make, covering everything from improperly reporting assets and mixing up parent/student information to missing crucial deadlines, and provides key fixes and pro tips to help families navigate the process accurately and maximize their eligibility for financial assistance,
Asset Reporting
The Pitfall
Over-reporting Assets (Especially 529 Plans). Mistakenly including non-reportable assets (like retirement accounts or primary home equity) orimproperly reporting college savings.
Key Fixes
✅ Exclude: Do NOT report retirement accounts (401k, IRA) or the equity of your primary residence.
✅ 529 Plans: Report parent-owned 529 plans as a parental asset, which is assessed at a much lower rate than student assets. Grandparent-owned 529 plans are NOT reported as an asset at all.
Timing
The Pitfall
Missing Deadlines. Financial aid is often “first-come, first-served,” and missing a deadline can mean missing out on state or school-specific aid.
Key Fixes
⏱️ File Early: Submit the FAFSA and any other required forms (like the CSS Profile) as soon as they become available (typically October 1st). ️
🗓 Check All Deadlines: Look up the federal, state, and each school’s specific priority deadlines—and meet the earliest one.
Data Accuracy
The Pitfall
Typos and Errors on Forms. Small mistakes (e.g., in SSNs, dates of birth, marital status, or leaving fields blank) trigger an application to be flagged, causing major delays or rejections.
Key Fixes
✏ Double-Check: Carefully verify all personal identifiers. Enter a ‘0’ instead of leaving a blank field.
❜ Do not use commas or decimal points for dollar amounts (round to the nearest whole dollar).
Identification & Signatures
The Pitfall
Confusing Student & Parent Info. Mixing up which section requires student data vs. parent data. Also, failing to properly sign the form.
Key Fixes
👤 Get Separate FSA IDs: Both the student and one parent must create their own FSA ID and use it to electronically sign the FAFSA.
🤝 Student First: Ensure the student completes their section first.
Divorce Situations
The Pitfall
Reporting the Wrong Parent. Using the wrong parent’s financial information (often the parent who claims the student on their taxes, which is incorrect for FAFSA).
Key Fixes
🏠 Custodial Parent Rule: Use the information for the parent with whom the student lived the most during the 12 months prior to filing. If that parent has remarried, you must include the stepparent’s financial information. If you have more questions about divorce situations, check out this YouTube playlist to get answers.
Complicated Tax Situations
The Pitfall
Business Owner Complexities. Not knowing whether to report a family business’s value or overstating its net worth.
Key Fixes
💼 Small Businesses: For FAFSA, families are generally not required to report the value of a small family-owned business with fewer than 100 employees.
📉 Net Worth: If required, only report the business’s current net worth (what it could realistically sell for today).
Verification & Documentation
The Pitfall
No Verification Preparation. Being selected for verification but not having the necessary documents ready, which halts the aid process.
Key Fixes
📑 Keep Records: Have copies of your tax transcripts, W-2s, and any other required financial documents easily accessible.
🔗 Use the IRS DRT: If available, use the IRS Data Retrieval Tool (DRT) to automatically import tax data, which greatly reduces verification issues.
School-Specific Requirements
The Pitfall
Ignoring School-Specific Directions. Only submitting the FAFSA and forgetting that certain schools require additional forms.
Key Fixes
🏫 Check Each School: Confirm if your colleges require the CSS Profile in addition to the FAFSA. Always use the correct Federal School Code for each school you list.
Unusual Circumstances
The Pitfall
Answering “Stumper” Questions. Incorrectly determining your dependency status or not knowing how to report outside financial assistance.
Key Fixes
🤔 Dependency: Review the FAFSA’s dependency questions carefully. Most high school seniors are dependent. If you have a true unusual circumstance (e.g., homelessness, abuse), contact the college’s financial aid office for a Professional Judgment Review.
Income Reporting
The Pitfall
Misreporting Income & Tax Info. Confusing AGI with total income, or not using the correct tax year (prior-prior year).
Key Fixes
🔍 Prior-Prior Year: FAFSA requires income/tax data from two years prior to the school year.
💰 AGI vs. Income: Use the Adjusted Gross Income (AGI) from your tax return, not just your income from work. If possible, use the IRS DRT for accuracy.
If you have any further questions, please do not hesitate to schedule a 30-minute meeting with Joe to get your questions answered.
