FAFSA season always brings confusion
If you’re filing the FAFSA this fall, especially for the first time, chances are at least one question will leave you befuddled.
It’s not just the questions regarding how to report 529 college savings accounts that cause confusion when filling out the Free Application for Federal Student Aid. Some students get tripped up by simply entering their name incorrectly. It happens more than you’d think.
Mistakes happen, but any delays in processing your application could have financial aid consequences
With FAFSA filing season well underway, here’s what you need to know about some of the form’s more vexing questions, including several submitted by readers. For answers, I turned to the U.S. Department of Education and Mark Kantrowitz, a financial-aid expert and author of the newly released book “Who Graduates from College? Who Doesn’t?”
Q: I’m confused about reporting investments. Help!
A: “People sometimes report the net (value) of the family home and retirement plans as assets,” Kantrowitz said. “They are investments, just not reportable investments. This is a common mistake that has a big impact on eligibility for need-based financial aid.”
Q: How do means-tested federal benefits, such as Medicaid, impact eligibility for financial aid?
A: Some families mistakenly believe that if they don’t qualify for any of those benefits, they won’t get financial aid. “Those questions were added to the FAFSA to provide additional ways in which families could qualify for financial aid, not to restrict who can qualify for financial aid,” Kantrowitz said.
Q: I filled out the FAFSA last year, and my daughter decided not to enroll in the college she picked. Do I have to start over or can I just update the FAFSA that I have?
A: Remember, the FAFSA is filed for a specific award year, Kantrowitz said.
For example, he said, if the student filed the 2021-2022 FAFSA last year that started fall 2021, but is now applying for admission for the 2022-2023 academic year in fall 2022, she’ll need to file a new FAFSA.
Q: Dependency status is also a source of confusion.
A: The student is a dependent student even if the parents do not claim him or her as a dependent on their federal income tax return; even if the student does not live with them; even if the student is self-supporting financially; and even if the parents refuse to complete the FAFSA or pay for college, Kantrowitz said.
To be an independent student, for example, the student must be at least 24 (as of Dec. 31 of the academic year), a graduate student, married, have legal dependents other than a spouse, or be a veteran of the U.S. Armed Forces (or serving on active duty).
Q: Why am I asked to provide my student’s driver’s license?
A: It’s to help prevent identity theft, according to the U.S. Department of Education. And in case you’re wondering, parking tickets and moving violations do not affect eligibility for financial aid.
Q: How do filers get tripped up about how the student’s name should appear on the FAFSA?
A: There are several common errors, according to the Education Department. For example, the FAFSA asks for last name first, first name last. Sometimes, students swap the two. In addition, the name must be the student’s legal name and must match their name on their Social Security card. Do not substitute a nickname or a middle name for the first name.
Keep your FAFSA questions coming. I’ll try to address more of them in a future column.