False Information on the FAFSA

Even innocent errors can have huge repercussions and can even be considered FAFSA fraud – here’s how to avoid making those mistakes on your FAFSA.

Here at College Made Simple, we try our best to get you the information you need to maximize the amount of aid you can receive. That means organizing your assets in the best possible way… making sure you give the schools only what they ‘need’ to know, and deferring income until the most opportune times.

It does not, however, mean fraud.

Sadly, that’s what many people resort to, in order to eke out a few extra dollars, out and out fraud on their FAFSA applications.

If you’re caught receiving help due to fraudulent information, you lose all benefits, must pay back any money you’ve received, and may face further fines and fees.

That’s if it’s an innocent mistake. If you’re found to have knowingly filed false info, the penalty is $20,000 and/or prison.

What’s more, this isn’t like taxes. A miniscule number of tax returns go through the audit process; a minimum 1/3 of FAFSA applications go through an audit, and some colleges audit every single one.

Lying on your FAFSA is a low-reward, high-risk endeavor, even being careless on your FAFSA carries huge penalties for no gain. It simply doesn’t make sense.

Just to help you out, let’s make sure we sweep away any grey areas, and give you a guideline to help you discern smartly positioning your assets, say – which is perfectly legal – to hiding them, which is not.

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You won’t find this anywhere else in the college planning space…

It’s an “inside look” at your college funding situation – over the phone, with one of our education consultants… absolutely FREE.

They’ll help you figure out where you stand… including whether or not you can lower your Expected Family Contribution (EFC) – and maximize your eligibility for financial aid.

What’s more – YOU set the date and time for the call.

Sign up for your Free Analysis today by following this link.

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Wise Positioning Vs. FAFSA Fraud

OK: Holding the bulk of your investible assets in retirement plans and other “non-includable” accounts seeing that these accounts typically won’t count against you when figuring out the Expected Family Contribution (EFC)

NOT OK: “Giving” assets to an aunt, uncle, or other distant relative, so you don’t have to declare them on the FAFSA.

OK: Deciding to buy that new car right before applying, so your assets take a hit and you have less ready cash.

NOT OK: Giving everyone in the family a new car, with the expectation that they’ll pay you back at a family interest rate.

OK: Deciding now is an opportune time to go back to school and finally get that degree you’ve been meaning to finish. You need the education anyway, and two tuition’s in the family could potentially reduce your EFC.

NOT OK: Saying you’ll go back to school, enrolling in classes, then getting dropped for never attending and non-payment (until recently, this was a popular scam that is now being monitored closely).

OK: Paying down credit card debt just before sending in your FAFSA. Credit card debt doesn’t count against your assets, after all – but if you pay it off, that money is no longer counted.

NOT OK: Hiding your money in debit accounts held in offshore banks.

OK: Contributing the maximum amount to your IRA or 401(k) so that more of your assets are held in a “non-includable” retirement plan that typically doesn’t affect your EFC.

NOT OK: Understating your assets or overstating the number of children you have in college on the FAFSA.  Sounds ridiculous – but surprisingly, this is one of the most common forms of FAFSA fraud.

There are plenty of other examples, but you get the picture.  If you’d feel sheepish telling an admissions officer what you’ve done, then chances are that you don’t want to do it. Part of getting the most financial aid you can is being smart – and committing fraud is just plain dumb.

We’re on your side – we believe that you should pay your fair share, but that you should take advantage of each and every legal strategy you are eligible for to help lower what you pay for college.  We see so many families that unfortunately ‘overpay’ for college… and seeing that college is so unbelievably costly nowadays, we don’t want anyone to pay more than they have to!

You can read more from our FAFSA FAQ series here.

To your successful college funding,

Jodi Polster,

College Made Simple’s Education Director (and FAFSA expert)

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Susan GoodmanJanuary 22nd, 2011 at 11:24 am

my oldest son dropped out of schoolbut plans to return by fall is it ok to count him…..are retirement acts assets ? if you are in a situation wher you owe more than your wotth is that reflected. Finally if you may inherit money but have not got now…what do I do with that ?for both FAFSA and CSS?

Alicia RichardsonJanuary 24th, 2011 at 11:53 am

Hi Susan,
If you are filling out the 2011-2012 FAFSA and your older son will return to college this fall, you can count him as attending college (you must provide at least ½ of his financial support and he must take at least 6 credits). You should also complete the FAFSA for him to receive financial aid. If he ends up not attending, you will need to correct the FAFSA, excluding him as a family member attending college, and contact the financial aid office where other children may be attending to alert them of the change.
The total amount you have saved in retirement accounts does not count as assets on the FAFSA; the balance is asked for on the CSS Profile, but most colleges will not hold this against you.
This depends where you hold your debt. The only debt that shows on the FAFSA is debt held directly against reportable assets. Most common are the mortgage(s) on property(s) other than your home and loans against investment accounts. The FAFSA does not take your primary home mortgage into account or any consumer debt, such as credit card and auto loans. The Profile does take your home mortgage into consideration, but only a small number of colleges ask about consumer debt.
Both the FAFSA and CSS Profile only look at a snapshot of your current financial situation. If you have not received the inherited money at the time you submit the forms, then the money does not need to be reported.

DJFebruary 4th, 2011 at 8:07 pm

I am a senior who’s filling out the fafsa for the first time. Without going into too much detail, I am asking you to evaluate my situation. My father passed away a few years ago, leaving my mother to run their small business. The Recession put her out of business. She has a few assets, but she really needs to save them for her retirement.

One of those assets is a rent house that brings in $9,900 per year in gross income. Since she is a displaced worker and makes >30k, that would make us an automatic EFC 0, right? I’m also unemployed and a first gen college student if that helps.

Alicia RichardsonFebruary 9th, 2011 at 8:47 am

Without all the details of your mother’s financial situation, it is not possible for me to answer your question of whether you’d qualify for a 0 EFC. There are many factors that go into the EFC equation. Based on the AGI of $30,000, yes, the EFC should be very low, but there are other factors that may drive up your EFC, such as the total value of your mother’s assets.

My best recommendation is that you and your mother watch our online workshop and sign up for a free consultation to discuss her full financial situation in detail with one of our education consultants. Only then can CPN give you a better idea of your EFC.

To register for the upcoming free college-funding online video workshop, simply visit http://www.collegemadesimple.com/college-webinar/ for details and registration.

Kay GaryFebruary 14th, 2011 at 6:57 pm

In a nutshell, in an effort to do some medicaid planning for my mother, assets ($30,000 cash) were given to me (last summer) and I in turn opened an investment account. Because of the 5 year look back rule I do not consider this money as “mine” since it could potentially have to be paid back for nursing home expenses if they should arise. Is there anything I can do? I only make $28,000/year and my husband is currently displaced.

Alicia RichardsonFebruary 15th, 2011 at 10:55 am

Hi Kay,

You do need to be honest in reporting your current assets. If the account is in your name, it should be reported. Depending on the colleges where your student is applying, the account may or may not have a significant impact. The FAFSA allows parents to have a minimum asset amount before it starts to count against them. This can be up to $65,000 depending on the parents’ age and family size. If this is the only asset you own, it is likely you will be under that asset protection allowance on the FAFSA. If a college requires the CSS Profile, you will not have the same asset protection.

If you’d like find out exactly how the account will impact your EFC, you should schedule a free consultation with one of our education consultants.

To register for the upcoming free college-funding online video workshop, simply visit http://www.collegemadesimple.com/college-webinar/ for details and registration.

wasim zaidiFebruary 26th, 2011 at 11:24 pm

My parents combined earning is $73,247. I work minimum. How can I complete FAFSA to ensure I am rewarded with best assistance. My parents do not have any savings for me, and I don’t intend to live off loans.

Alicia RichardsonFebruary 28th, 2011 at 1:53 pm

Hi Wasim,

I’m sorry, but it is impossible for me to answer your question without all your and your parents’ financial information. The best advice I can offer is for your parents to register for the next free college-funding online video workshop, then sign up for a consultation with one of our Education Consultants. The Education Consultant will be able to advise them on what should (and should not) be included on the FAFSA to ensure you receive the best assistance.

Heather AveyDecember 11th, 2011 at 8:39 am

My son’s father lied on his FAFSA and said that he pays half or more of everything for our son. This is false he owes over $1000 in child support and will be losing his license this month. Our son is 19 months old and the only thing that he has ever contributed to is 1 package of diapers. I was wondering what FAFSA does in a case like this and if they even look into something like this.

JuanOctober 19th, 2012 at 7:13 pm

Hi my parents have an accountant do their taxes and he assumed they were married so he filed their taxes jointly. Problem is they aren’t married so isn’t it technically fraud. can i still get any financial aid? and will i get my parents in trouble if the financial aid office found out they weren’t married?

Jodi PolsterOctober 22nd, 2012 at 9:03 am

Hello Juan,
Even though your parents filed their taxes together but are not married you can still receive financial aid. When you submit your FAFSA you will just use your custodial parent’s information and leave out the non-custodial parent information. As long as you have documentation that your parents are not married you should have no issues with the financial aid office.

HaivuJanuary 9th, 2013 at 7:02 pm

My parents don’t work, which means they have no income. So they don’t have tax returns. Will that effect my eligibility for FAFSA? My mom has a disability income.

DeborahJanuary 14th, 2013 at 9:42 am

hello, On the FAFSA, can I deduct upgrades/repairs put in to our second home from its net worth? We have put in more money than is the net worth after figuring in our mortgage

Jodi PolsterJanuary 18th, 2013 at 1:13 pm

Hello Haivu,
Your parents not working will not effect your eligiblity for financial aid. You will still need to complete a FAFSA and your mom’s disability income will need to be included on the FAFSA, under Other Untaxed Income.

Jodi PolsterJanuary 18th, 2013 at 1:19 pm

Hello Deborah,
The value of a second home would be determined by the market value. Although upgrades and repairs cannot be deducted from that value, you can contact the college’s financial aid office to make them aware of your specific situation.

JuneJanuary 23rd, 2013 at 9:10 pm

My daughter will start college this fall. My divorce was final 11/12. I moved out and bought my own house in 8/12. My ex-husband makes slightly more than me. The legal agreement says that our kids live with each of us 50% of the time and we split costs 50/50. Even if my daughter lived with me FT when I moved out, of course it still wasn’t more than 1/2 of the year. Does he need to fill out the FAFSA? I filled it out,but I”m not sure if that is a problem. I am the custodial parent so technically I have them 1/2 the year + 1 day.

Jodi PolsterJanuary 28th, 2013 at 9:35 am

Hello June,
When parents of a college student are divorced, only the custodial parent needs to complete the FAFSA. Since you are the custodial parent your ex-husband does not need to complete a FAFSA.

ShawnettaFebruary 14th, 2013 at 4:14 am


I have a nephew who wants to start school in the fall. His mom is on disability n doesn’t work. His step father lives in the household and works but mom and step dad have different last names. How will this affect FAFSA?

Jodi PolsterFebruary 18th, 2013 at 2:48 pm

Hello Shawnetta,
For this particular situation, both the biological mom’s and stepfather’s information will need to be listed on the FAFSA. The stepfather’s last name will not have an impact. If you have additional questions regarding this topic, please contact our office at info@collegeplanningnet.com.

GiaMarch 20th, 2013 at 7:42 am

Hi, I just filled out my 2nd FAFSA application. The 1st time I didn’t really know what I was doing so I only used my mother’s income. Well now, I know exactly how to fill out the app and I submitted BOTH of my parent’s income. both of their incomes are low. Do you think I will still get financial aid with this change?

Jodi PolsterMarch 20th, 2013 at 12:13 pm


There are many different factors that determine financial aid. Without speaking to you and reviewing your financial situation and FAFSA, there would be no way for me to determine how much financial aid you may be eligible for. If you would like to have a free consultation with one of our Education Consultants to discuss your specific situation please email us at info@collegeplanningnet.com.

LalaloopysMarch 21st, 2013 at 2:18 pm

What will happen to a parent who gets educational funding & grants ect… that files single mother & has joint custody of the child & only has the child every other hoilday & 40 days out the summer. The child does not live with her? How can I report it?

LouieMarch 22nd, 2013 at 6:52 am

Ray, we cannot give this kind of advise. You can call the FAFSA center at 1-800-4FEDAID and ask them.

JulianApril 8th, 2013 at 12:10 pm

this is my first time filed the FAFSA application by myself.
in the section that asks about the amount of money in bank account, i miscalculated and write down the amount that is less than that it should be.

is there any consequence of my mistake?
and what should i do to fix it?

p.s.: English is not my first language. any advice would be greatly appreciated.

Jodi PolsterApril 10th, 2013 at 12:43 pm

Hello Julian,
You are able to make changes to your FAFSA. I would suggest going to the FAFSA website, at http://www.fafsa.ed.gov and updating your FAFSA with the correct amount. The website has step-by-step instructions on how to make these changes.

LEAApril 20th, 2013 at 12:23 pm

this is my first fasfa application and i don’t want to fill out sth wrong.I’m a full time student so i don’t work only my husband works and he does $ 25000 per year, this is our only income. my husband has $ 4000 savings in bank account in his name.
so when I will apply for Fasfa should i declare my husband’s savings ??

Jodi PolsterApril 22nd, 2013 at 5:47 am

Hello Lea,
Yes, you will need to include your husband’s savings on the FAFSA. The FAFSA will ask for the amount of Cash, Savings and Checking that is listed in your accounts on the day the FAFSA is submitted.

jasmineMay 16th, 2013 at 6:02 am

hello, its my first time applying for FAFSA.
What if my parents don’t live here and they don’t have ssn?
some people told me to write down all 0s for ssn, but what about their income?
they’ve never filed taxes in US and i don’t get financial help from them.
should i just put 0 for their income also?

Noel JohnsonMay 17th, 2013 at 10:34 am

Hi Jasmine,

Although your parents do not assist you financially the fafsa may still require their information if you are less than 24 years old. If you put 0’s in for their information your fafsa will be rejected. I would recommend calling the fafsa hotline for guidance. The phone number is 1-800-433-3243.

EmDecember 19th, 2013 at 1:08 pm

Hello. Here’s my situation: When filing my FAFSA for the 2013-2014 academic year, I received all the financial aid I could possibly get because my father’s income was very low. He passed away this summer. A rep from my school’s financial aid office said most people report the death of a parent if they think it would help their financial status (since I was already getting as much money as possible through loans, grants, etc, saying he died wouldn’t have changed anything). However, I received an inheritance. Was I supposed to report the inheritance in my FAFSA while I was in school even though it wasn’t a part of last year’s income and is a one time event that isn’t reflective of my ability to pay? Or do I wait until this upcoming FAFSA filing period to report the inheritance? I’m confused and stressed out and just trying to do the right thing. I’ve already had to deal with losing my dad, I don’t want to also be accused of fraud or anything. Your help would be greatly appreciated.

Jodi PolsterDecember 23rd, 2013 at 1:55 pm

Hello. I am so sorry for your loss. My condolences to you and your family. Generally speaking, the inheritance would need to be listed on the 2014-2015 FAFSA if it is one of the includable investments required to be listed on the FAFSA. The inheritance does not need to be listed on the 2013-2014 FAFSA. I would recommend speaking to a financial aid counselor in your school’s financial aid office and explaining your situation. Hopefully they can work with you so your inheritance does not affect your financial aid. If you have any additional questions you can contact our office at info@collegeplanningnet.com. Please direct the email to Jodi Polster.

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Editor's Note: Scott Weingold has been ranked the #1 “College Financial Aid Expert Worth Knowing About” in the entire country by CollegeStats.org.  He has co-authored the book, “The Real Secret To Paying For College. The Insider’s Guide To Sending Your Child To College – Without Spending Your Life’s Savings.” Scott also publishes a popular free online newsletter, “College Funding Made Simple" which reveals insider’s tips, methods, and strategies for beating the high cost of college.

Scott is the co-founder and a principal of the widely renown College Planning Network, LLC – the nation’s largest and most reputable college admissions and financial aid planning firm. CPN is a proud member of the Better Business Bureau, the National Association of College Funding Advisors, the National Association for College Admission Counseling, the National Association of Student Financial Aid Administrators and the Student Affairs Administrators in Higher Education.

Scott, along with his college funding advisory team, helps thousands of families throughout the country with their college planning needs and offers a series of free educational webinars and workshops on “How To Pay For College Without Going Broke In The Process!” He's been featured or mentioned in The Philadelphia Inquirer, Yahoo News, TheStreet.com, Voice America with Ron Adams, Crains Cleveland Business, and on Cleveland Connection with James McIntyre.  Scott has published numerous articles and is a professional speaker who has addressed thousands of audiences online and offline throughout the United States.  His actionable insights and candid, open approach have earned him & his team numerous media interviews, citations, and speaking opportunities, and his free online video workshop is one of the Internet’s most widely viewed pieces in the college funding space.