Bug in the System: Problems with the FAFSA for 2018-2019
By Joe Messinger, CFP®
October 13, 2017
What could be confusing about “mom” and “dad”?! Well, on a government form like the FAFSA, it is causing headaches. Single parent filers are having problems with the FAFSA due to a small change made on the financial aid application this year. If you are not familiar with how it is supposed to work, this bug could cost you financial aid.
Single parents include parents who are divorced, separated, never married, or widowed. In those situations, the custodial parent is the only one who provides financial information (other than the student) to the FAFSA. The custodial parent is the one the student lived with more during the past 365 days. It doesn’t matter who claims a student on their taxes.
Parent 1 and 2 vs. Mother and Father
In 2014 because of a lawsuit, the FAFSA went with gender neutral terms (“parent 1” and “parent 2”) instead of using “mother” and “father.” In the past, single parents would fill their information as “parent 1.” “Parent 2” was not necessary. This year for some reason the parent 1 and parent 2 fields were changed to “father” as parent 1 and “mother” as parent 2. Suddenly things got confused.
In the form when marital status is marked as divorced or separated, you are forced to indicate whose information you will be providing and choose from father or mother. The system is assigning numbers input as father to parent 1, the custodial parent, and numbers of mother as parent 2.
When the custodial parent is a single mom and she uses the Data Retrieval Tool (DRT) to pull her numbers from her IRS tax return, it is plugging her number into the parent 2 slots—the wrong spot!
The system can come to halt. The custodial parent is parent 1, but it’s confused because the only numbers it has are mom’s as parent 2. Clear as mud?
We are left wondering why the change was even made? The lawsuit fixing the system in 2014 still applies. Using gender neutral terms prevents confusion and makes more sense…even when the parents are married. Today, we don’t always have a traditional mother and father.
What should you do?
First, we are recommending that ALL filers who might be eligible for need-based financial aid NOT use the DRT to automatically fill in their numbers. Due to security concerns, the DRT does not show your figures. It says “transferred from IRS” in those fields instead. When your financial aid is on the line, we prefer to fill in the numbers ourselves and not trust that a mistake was not made somewhere along the way.
You should be aware that not using the DRT increases your chances of being selected for “verification.” Verification is a process that will require you to provide additional documentation so they can “verify” what was reported. Worth the extra step to ensure you get as much out of the financial aid system as you are entitled to.
Second if a single parent, choose “father” as custodial regardless of whether it is actually the father or the mother. College financial aid offices are suggesting parents do this. You are only going to fill in one anyway. Until they get this bug fixed, “father” will need to be the choice.
Not a perfect solution obviously but until they fix this bug this is the guidance being offered by financial aid directors at several institutions.
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