5 FAFSA Mistakes That Can Cost You Thousands
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5 FAFSA Mistakes That Can Cost You Thousands

Every year, families lose out on thousands of dollars in aid simply because they made a mistake on the FAFSA. Some of these errors are easily avoidable, while others come from misunderstandings about how the form works. In today’s competitive college landscape, even one misstep can significantly reduce your aid eligibility.

5 FAFSA Mistakes

At Diversified College Planning, we’ve helped hundreds of families correct FAFSA errors and improve their financial aid outcomes. Here are five of the most common mistakes—and how to avoid them:

  1. Using the Wrong Parent’s Info
    In cases of divorce or separation, many families list the wrong parent. FAFSA now requires information from the parent who provides the most financial support—not necessarily the one the student lives with most.

  2. Including Retirement Accounts as Assets
    Retirement assets (401k, IRAs, etc.) should not be reported on FAFSA. Including them inflates your asset base and reduces eligibility.

  3. Failing to List All Eligible Colleges
    Some families list just one or two schools. Listing multiple schools gives you more flexibility and opens up additional aid offers.

  4. Reporting Investment Real Estate Incorrectly
    Your primary residence doesn’t count—but other properties do. Misreporting real estate is a common trigger for lower aid.

  5. Missing the State or School Deadlines
    Many states and colleges have earlier priority deadlines than the federal one. Missing those can mean missing out on state or institutional aid.

Diversified College Planning reviews every FAFSA line-by-line to ensure accuracy and strategy. We also help families understand the impact of their answers before they submit.

Contact Us Today:
Want to make sure your FAFSA is mistake-free and working in your favor?
📞 Call us at 770-662-8510
📅 Schedule a free consultation: Book with Jarad Stolz
Or visit our Contact Page: https://diversifiedcollegeplanning.com/contact-us/

FAQs: 5 FAFSA Mistakes That Can Cost You Thousands

What’s the most expensive FAFSA mistake families make?
Missing priority filing deadlines. Many grants are first-come and campus-based funds can run out. File as early as possible after FAFSA opens and before each college’s priority date.
Is skipping the FAFSA a mistake if we think we won’t qualify?
Yes. You may miss federal loans, work-study, state grants, and institutional aid that require a submitted FAFSA—even for higher-income families or merit-focused schools.
What income and asset errors cause the biggest issues?
Using estimates that don’t match tax returns, misreporting untaxed income/retirement contributions, or entering student assets where parent assets belong (student assets are assessed more heavily).
Do we report home equity or retirement accounts on FAFSA?
Primary home equity and qualified retirement accounts are not reported on FAFSA. Report cash, savings, checking, investments, and 529s owned by a parent as parent assets.
How do divorced or separated parents commonly make mistakes?
Listing the wrong parent. FAFSA uses the parent who provided more financial support over the last 12 months (and includes a stepparent if remarried). Mixing info from both households slows processing.
What documentation should we have ready to avoid errors?
Most recent tax return(s) and W-2s/K-1s, records of untaxed income, current statements for cash/investments/529s, and—if applicable—support or custody documents.
Is reporting business or farm value a common pitfall?
Yes. Rules vary by year and business size/type. Read the current FAFSA instructions carefully; when required, report net worth (assets minus debts) accurately and keep a worksheet for your figures.
Should we include outside scholarships on the FAFSA?
You don’t list them on the FAFSA itself, but you must report them to the college. Policies differ on whether they reduce loans/work first or institutional grants—ask each school.
What name/ID mismatches delay processing?
Typos on legal names, Social Security numbers, birthdates, and email addresses; creating duplicate accounts; or mixing parent/student contact info across forms.
Is it a mistake to submit without reviewing the Student Aid Report (SAR)?
Yes. Check the SAR for errors, flags, or verification requests. Fix issues quickly to keep your place in line for funds with limited budgets.
Does filing late reduce chances for campus-based aid?
Often. Federal Pell follows eligibility, but SEOG, work-study, and institutional grants are limited. Filing after priority dates can cost thousands over four years.
Can we appeal if the FAFSA base year doesn’t reflect our situation?
Yes. Submit a professional judgment appeal with documentation for job loss, medical bills, one-time income, or other changes so colleges can reassess your aid.
How does Diversified College Planning help families avoid FAFSA mistakes?
We build a deadline map, pre-check income/asset entries, align FAFSA/CSS data, prepare verification documents, and guide appeals—so you don’t leave money on the table.


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