Transcript Common FAFSA Errors

ILASFAA Annual Conference
April 16-18, 2008
Common FAFSA Errors
And how to avoid them
Mistakes happen…
• Making a mistake on the FAFSA can delay
the processing because it takes 2-3 weeks
to process a corrected application.
• Most mistakes can be avoided by carefully
reading the instructions and questions.
ILASFAA Annual Conference
April 16-18, 2008
Common mistakes…
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Adjusted Gross Income (AGI)
Total Income Tax
Social Security Numbers
Marital Status
FAFSA Worksheets
ILASFAA Annual Conference
April 16-18, 2008
ILASFAA Annual Conference
April 16-18, 2008
Errors Involving Taxes
Adjusted Gross Income (AGI)
• Common error is to report total income tax
equal to AGI
• Generally speaking, total income tax is
less than the AGI
• This can result in a FAFSA reject.
ILASFAA Annual Conference
April 16-18, 2008
Taxes Paid
• Be sure to report total income tax, not taxes withheld
or taxes due.
– Total withholdings can be higher or lower than the total
income tax.
• The FAFSA asks for the last line in the Tax and Credits
section of the tax return, not the total tax line.
– The taxes in the Other Taxes section are not included in the
FAFSA because the EFC formula factors them in.
ILASFAA Annual Conference
April 16-18, 2008
Tax Filing Status
• If the student is not required to complete a 1040,
it is important they indicate they were eligible to
complete a 1040A or 1040EZ.
– This could impact which EFC formula is used.
• Filing as head of household is often done
incorrectly. If there is an error in the head of
household status, Does you school require the
amending of taxes?
ILASFAA Annual Conference
April 16-18, 2008
Not Filing Taxes
• The online FAFSA will question the applicant if
their total income indicates they should file a tax
return.
– A reject code will appear on the ISIR.
• Tax protesters are not eligible for federal
student aid.
– If not, only option will be private loans.
ILASFAA Annual Conference
April 16-18, 2008
ILASFAA Annual Conference
April 16-18, 2008
Errors Involving
Social Security Numbers
Understanding the Card
• Be sure the student uses their legal name
as it appears on the card.
– Using a nickname or any other name will
cause a delay.
• Double check that the student didn’t
accidentally switch their social security
number with their parents or a sibling.
ILASFAA Annual Conference
April 16-18, 2008
Parents’ Social Security
Numbers
• While the student is required to have a social
security number (SSN), the parents are not.
• If the parent does not have an SSN, the student
should not just make up a number. This will fail
in the database match.
Use 000-00-0000
Also while adding parent information, they request
the last and first initial.
ILASFAA Annual Conference
April 16-18, 2008
ILASFAA Annual Conference
April 16-18, 2008
Errors Involving
Marital Status
Marital Status of Separated
• If the student is married, but separated, he
or she should answer “Yes” to the question
“As of today, are you married?”
• Students are considered married until the
divorce is final in the eyes of the court.
ILASFAA Annual Conference
April 16-18, 2008
Divorced or Separated
Parents…
• Who should the student use on the FAFSA?
• The parent that the student resided with most during
the past 12 months.
– Not necessarily the one that has legal custody or the one
that claimed the student for tax purposes.
• If that parent has remarried prior to completing the
FAFSA, the spouse’s information should also be
included on the FAFSA.
ILASFAA Annual Conference
April 16-18, 2008
Updating Marital Status
• The FAFSA cannot be updated for mid-year
changes in an applicant's marital status.
• If the student expects to be married in the near
future, they should carefully consider whether to
submit the FAFSA before or after they are
married.
• If the school questions an applicants marital
status, a marriage certificate or copy of divorce
decree is sufficient.
ILASFAA Annual Conference
April 16-18, 2008
ILASFAA Annual Conference
April 16-18, 2008
Errors Involving Assets
529 Prepaid Tuition Plans
• Prepaid tuition plans are considered assets on
the FAFSA. The value is the refund value of the
account.
• Plans belonging to siblings are reported as an
asset to the parent, if the parent is the account
owner.
• Custodial 529 plans, custodial prepaid tuition
plans, custodial Coverdale accounts are NOT
reported on the FAFSA when the applicant is a
dependent student.
ILASFAA Annual Conference
April 16-18, 2008
Other Errors with Investments
• Rental properties are counted as investments,
not business assets.
– Unless they are part of a formally recognized
business.
• Pensions and the cash value of a life insurance
policy is not reported as an asset on the FAFSA.
ILASFAA Annual Conference
April 16-18, 2008
ILASFAA Annual Conference
April 16-18, 2008
Errors Involving
Applicant Statuses
Is the Student a Veteran?
• To be considered a veteran, the applicant
must have served on active duty and been
discharged under other than dishonorable
conditions.
• If the service was only for training, such as
National Guard, Reserves or ROTC, the
student is not a veteran.
ILASFAA Annual Conference
April 16-18, 2008
Dependents Other Than a
Spouse?
• What is a legal dependent?
– A person for whom the student will provide
more than half of their support. This includes
money, gifts, loans, housing, food, clothing,
transportation, medical, etc.
• If the student has a child and the child is
supported by their parents or someone else,
should answer “no” to the legal
dependents question.
ILASFAA Annual Conference
April 16-18, 2008
Unborn Child?
• Will the child be born before or during the award
year?
• If yes and that child will receive more than half of
his or her support from the student, then the
child should be counted as a member of the
household.
ILASFAA Annual Conference
April 16-18, 2008
ILASFAA Annual Conference
April 16-18, 2008
Errors Involving
FAFSA Worksheets
Worksheets A, B, C
• Some families overlook them because they
appear at the end of the paper application.
– Leaving the questions blank can result in an
inaccurate EFC.
• The worksheets are needed to account for
untaxed income as well as items that should be
excluded from the EFC calculation.
ILASFAA Annual Conference
April 16-18, 2008
Worksheet A
• Earned Income Credit (EIC) is reported on
Worksheet A.
– It is not reported as part of “Income Earned
from Work.”
ILASFAA Annual Conference
April 16-18, 2008
Worksheet B
• Do not include employer contributions to
retirement plans.
– Only the employee’s contribution should be
listed.
ILASFAA Annual Conference
April 16-18, 2008
Worksheet C
• This is where income and benefits excluded
from the taxable income are reported.
• Most students will list Federal Work Study
earnings here.
• Child support paid is also reported on
Worksheet C.
• Keep in mind the FAFSA is based on the
calendar year, not the academic year.
ILASFAA Annual Conference
April 16-18, 2008
ILASFAA Annual Conference
April 16-18, 2008
Errors Involving Eligibility
Questions to Pay Attention to…
• Will you have a bachelor’s degree by July
1?
– Answering “yes” will make the student
ineligible for the Pell Grant.
• Are you interested in taking loans?
– Answering “no” does not allow the student to
be considered for additional grant funds.
ILASFAA Annual Conference
April 16-18, 2008
A Few More Pointers
• Highest school parents have completed
– Do not skip this question as many states use
this when determined state grant awards.
• If using FAFSA on the Web, do not check
the “Early Analysis” flag.
– Selecting “Early Analysis” will not send your
FAFSA information to the state or a particular
college.
ILASFAA Annual Conference
April 16-18, 2008
Selective Service Registration
• All males between the ages of 18-26 must be
registered with Selective Service to receive
financial aid.
• If they would like the FAFSA to complete the
process for them, they can answer “yes”.
• If they have not yet turned 18, their record will
not be processed until 30 days from their 18th
birthday.
ILASFAA Annual Conference
April 16-18, 2008
ILASFAA Annual Conference
April 16-18, 2008
Other Errors
Double Check Everything
• The number one mistake students make is leaving
something blank.
– If the answer is zero or does not apply to the student,
write in a 0.
• Dollar amounts are written without cents.
– $500.00 would be $50,000
• The student needs to be counted as one of the folks in
college.
ILASFAA Annual Conference
April 16-18, 2008
ILASFAA Annual Conference
April 16-18, 2008
Questions
Source:
• http://finaid.org/fafsa/errors.phtml
ILASFAA Annual Conference
April 16-18, 2008