Top 3 Financial Aid Mistakes Families Make—and How to Avoid Them
A little preparation today can save you thousands tomorrow!
Hello Discerning Parents and Future Graduates,
Today, we dive into a crucial topic: navigating the financial aid process without hitting common pitfalls. Think of this as your guide to avoiding the banana peels on the road to maximizing aid. After all, higher education is expensive enough without adding self-inflicted financial faux pas to the mix! Let’s talk about the top three mistakes families make and, more importantly, how to sidestep them.
Mistake #1: Filing FAFSA Too Late
The Problem:
FAFSA applications open on October 1st each year, but many families procrastinate, thinking there’s plenty of time. Unfortunately, grants and scholarships often operate on a first-come, first-served basis, leaving late filers with fewer options.
The Consequences:
Delaying your FAFSA submission could mean missing out on thousands of dollars in aid, particularly state grants and institutional scholarships that have limited funds.
The Solution:
Start Early: Submit your FAFSA as soon as it opens.
Prep Ahead: Gather necessary documents like tax returns and Social Security numbers by September.
Use Estimates: If your tax returns aren’t ready, use estimates and update your FAFSA later.
Pro Tip: Even if you think you won’t qualify for need-based aid, still file the FAFSA. Many merit-based scholarships require it!
Visit the official Federal Student Aid FAFSA page for key dates and filing resources.
Mistake #2: Misreporting Financial Information
The Problem:
Filling out FAFSA can feel like solving a Sudoku puzzle without instructions. Common mistakes include:
Including retirement accounts as assets (they’re not counted).
Misreporting untaxed income as taxable income.
The Consequences:
Errors can inflate your Expected Family Contribution (EFC), potentially reducing the aid package your student receives. In some cases, it could even trigger verification delays.
The Solution:
Double-Check Entries: Make sure all financial figures are accurate and properly categorized.
Exclude Non-Countable Assets: Don’t list your primary home, retirement accounts, or small businesses (with fewer than 100 employees).
Use the IRS Data Retrieval Tool: This handy tool auto-fills your tax data directly into FAFSA, minimizing errors.
Pro Tip: Have a trusted friend or financial advisor review your FAFSA before submission.
Check out FAFSA Tips from Saving for College.
Mistake #3: Overlooking Financial Aid Appeals
The Problem:
Families often assume the initial financial aid offer is set in stone. However, life happens—think job losses, medical bills, or unexpected expenses—and aid packages can sometimes be adjusted to reflect those changes.
The Consequences:
By not appealing, families could leave money on the table or miss the chance to make college more affordable.
The Solution:
Be Proactive: If you’ve experienced significant changes in financial circumstances, contact the school’s financial aid office immediately.
Provide Documentation: Gather supporting materials (e.g., tax forms, medical bills) to strengthen your case.
Negotiate Smartly: If your child has received a better offer from another school, politely highlight the discrepancy and request a review.
Pro Tip: Keep the tone of your appeal letter polite and professional—financial aid officers are more likely to help if you’re respectful.
Bonus Tips to Stay Ahead of Financial Aid Mistakes
Stay Organized: Create a calendar with FAFSA deadlines and set reminders for each school’s financial aid timeline.
File Annually: FAFSA isn’t a one-and-done form; it needs to be submitted every year your student is in school.
Ask Questions: Reach out to financial aid offices if you’re confused—they’re there to help!
Filing for financial aid doesn’t have to feel like deciphering ancient hieroglyphics. By avoiding these three common mistakes—filing late, misreporting finances, and skipping appeals—you can maximize your student’s aid package and minimize your financial stress. A little preparation today can save you thousands tomorrow!
Need help navigating the financial aid maze? Let’s make a plan together! Schedule a Getting Acquainted Call to ensure your family is making the most of every financial aid opportunity.
Warm regards,
Julie Bray
Your Family's College and Retirement Champion
GW Financial, Inc.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by GW Financial, Inc. to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2024 GW Financial, Inc.