The FAFSA Form for the 2023-24 school year is released on October 1. Accuracy is key when filling out the FAFSA and the consequences of making even a simple error can be costly. Here are 3 common mistakes to avoid when filling out the FAFSA.
1. Reporting retirement plan assets as investments
The FAFSA is classified as a non-reportable asset for financial aid purposes. Recording your 401(k), 403(b), or IRA as an investment could significantly reduce your child’s eligibility for need-based aid.
2. Failing to use whole dollar amounts
You are only able to use whole dollar amounts on the FAFSA form. Making the mistake of using decimal points could be very costly. For instance, if you enter 300.50, then the FAFSA will record the number as 30,050. This small misstep could cost you thousands of dollars in need-based aid. For this reason, it is crucial to thoroughly review your FAFSA form before submitting it.
3. Using the market value of an asset
When reporting assets on the FAFSA, use net worth for reporting purposes. Net worth is the market value of an asset minus the debt secured by it. For instance, if you had an investment property with a market value of $200,000 and a $100,000 mortgage remaining, then you should count this asset as $100,000. If you were to report $200,000, then your financial position would be overstated, causing your child to qualify for less aid.
Samuel Shinn, MBA
Wealth Advisor & LPL Financial Planner
856-437-9294