1. ILASFAA Annual Conference April 16-18, 2008 Common FAFSA Errors And how to avoid them

2. ILASFAA Annual Conference April 16-18, 2008 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.

3. ILASFAA Annual Conference April 16-18, 2008 Common mistakes… Adjusted Gross Income (AGI) Total Income Tax Social Security Numbers Marital Status FAFSA Worksheets

4. ILASFAA Annual Conference April 16-18, 2008 Errors Involving Taxes

5. ILASFAA Annual Conference April 16-18, 2008 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.

6. 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.

7. 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?

8. 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.

9. ILASFAA Annual Conference April 16-18, 2008 Errors Involving Social Security Numbers

10. ILASFAA Annual Conference April 16-18, 2008 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.

11. 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.

12. ILASFAA Annual Conference April 16-18, 2008 Errors Involving Marital Status

13. ILASFAA Annual Conference April 16-18, 2008 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.

14. 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.

15. 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.

16. ILASFAA Annual Conference April 16-18, 2008 Errors Involving Assets

17. ILASFAA Annual Conference April 16-18, 2008 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.

18. 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.

19. ILASFAA Annual Conference April 16-18, 2008 Errors Involving Applicant Statuses

20. ILASFAA Annual Conference April 16-18, 2008 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.

21. 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.

22. 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.

23. ILASFAA Annual Conference April 16-18, 2008 Errors Involving FAFSA Worksheets

24. ILASFAA Annual Conference April 16-18, 2008 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.

25. 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.”

26. 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.

27. 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.

28. ILASFAA Annual Conference April 16-18, 2008 Errors Involving Eligibility

29. ILASFAA Annual Conference April 16-18, 2008 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.

30. 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.

31. 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 18 th birthday.

32. ILASFAA Annual Conference April 16-18, 2008 Other Errors

33. ILASFAA Annual Conference April 16-18, 2008 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.

34. ILASFAA Annual Conference April 16-18, 2008 Questions

35. ILASFAA Annual Conference April 16-18, 2008 Source: http://finaid.org/fafsa/errors.phtml