As FAFSA season approaches, families nationwide will begin the financial aid application process. While completing the FAFSA may seem straightforward, even small errors can have significant consequences. Mistakes on the application can increase a family’s Student Aid Index (SAI), reduce eligibility for need-based financial aid, delay processing, or create additional verification requirements.
At PayForEd, our goal is to help families navigate the financial aid process with confidence and reduce the stress that often accompanies college planning. To support that effort, we have compiled the ten most common FAFSA mistakes and practical tips to help families avoid them.
Beyond completing the FAFSA correctly, families should evaluate the full financial impact of their college choices. The PayForED College Cost Analyzer provides greater transparency into the financial aid process by helping families estimate college costs and compare affordability. In today’s environment, where federal student loan limits may not cover the full cost of attendance, students and parents must focus not only on admission decisions but also on the long-term financial outcomes of those decisions.
Here is a list of the 10 most common errors and issues to avoid:
Create Your FSA ID and Password First
To complete and sign the FAFSA, all contributors must have a StudentAid.gov account (FSA ID). You need to create the FSA ID before starting the FAFSA. The FSA ID (or Federal Student Aid ID) is the login and electronic signature process used by the Department of Education. Students, parents, and borrowers use the FSA ID to apply for federal student aid, sign their FAFSA, and access any federal student aid records online.
With the mandatory link to the IRS data, your tax filing decision will determine who will need an FSA ID based on the tax filing year. For the 2027-28 FAFSA, the tax information will be 2025 tax return data. The dependent students will initiate the FAFSA process by creating their FSA ID. If the parents have filed their taxes as married and separate, then both parents will need an FSA ID. For parents who have filed jointly, only one parent will need an FSA ID, as the information of both parents is linked to a single tax return. Establish your FSA ID before the FAFSA submission process begins is recommended.
For divorced and separated families, the parent who will be submitting the FAFSA should be the one with the FSA ID and Password. Under FAFSA Simplification, some situations require both parents to get an FSA ID.
The applying student should be listed on their tax return if they are a dependent child. Ensure the student uses a personal email and not their high school email. The email address is needed for future use in FSA ID password recovery and resets.
First-time filers Should Use a Tool to Estimate Their Financial Aid Position
We recommend that first-time FAFSA filers use a financial aid calculator to estimate their financial aid position or SAI. This number is referred to as the Student Aid Index or (SAI). The SAI number is generated by completing the FAFSA.
It would be best to get an estimate first, as the IRS data integrates directly into your FAFSA, and you will not be able to see the data imported. By using a financial aid calculator, such as the College Cost Analyzer or another tool, you will obtain an estimate of the SAI generated by the FAFSA method.
After submitting the FAFSA, the SAI is generated. An independent SAI estimate can help families identify potential discrepancies before relying on the FAFSA-generated result. If there is a significant difference, we recommend contacting the Student Aid Help desk or the college financial aid office that receives your FAFSA. You cannot change any financial information imported into the system; only the college financial office can make adjustments after submitting the required documentation correctly.
Using the Right Tax Year
The FAFSA process uses a term called Prior Prior. The 2027-28 FAFSA will be available for submission starting October 1, 2026 and will use 2025 tax data. If you have filed for a tax extension, the new required import of IRS data may cause a delay in the FAFSA submission. It typically takes the IRS data 4 – 8 weeks to become available for DOE integration, depending on your method of tax submission. If you have a change in your marital status or income, you will need to submit an appeal to each college with an explanation.
Retirement Account Rollovers
Qualified retirement account rollovers are not considered income for FAFSA purposes and should not be included as untaxed income. The 2027–28 FAFSA includes specific fields for reporting IRA and pension rollovers. It is unclear on the accuracy as this has been a problem for a few years.
However, there is an important issue families should understand: the IRS information transferred to the FAFSA does not identify whether a retirement distribution was a qualified rollover. If a rollover is reflected as a distribution and appears to affect the FAFSA calculation, the family may need to provide documentation to the college’s financial aid office so the information can be corrected.
For this reason, families who completed a retirement rollover during the FAFSA’s applicable tax year should carefully review their FAFSA information and SAI calculation to make sure the rollover has been treated correctly.
Asset Reporting for FAFSA
The assets reported on the FAFSA must use the value at the time of submission, not the value from the tax year. The FAFSA should only include taxable savings and investment accounts, and all children’s 529 plans. Small family business and farm values have been removed as a reported asset. Items to exclude as parent assets are retirement accounts and home equity values, which are a common mistake. Some colleges have a secondary financial aid process that may require additional financial information excluded from the FAFSA.
Leaving Blank Spaces
We recommend that you complete all fields. Put Zero or NA in any fields that are not applicable.
Reporting of Child Support As an Asset
A FAFSA simplification change is that paid child support received will be reported in the asset section of the FAFSA. This change will significantly reduce the impact of that number since assets are weighted at 5.64% rather than the much higher income allocation.
Reporting of Step-parents’ Information
For divorced parents, if one or both have remarried, the FAFSA requires the household’s income, disregarding the parents’ biological status. In this case, the FAFSA-submitting parent must include the new spouse’s income and assets in completing the FAFSA.
Knowing Your State’s FAFSA Deadline
Most states use FAFSA information to determine eligibility for state financial aid programs, but state deadlines and requirements vary. Some states require only the FAFSA, while others may require a separate application or additional documentation.
This is particularly important for returning college students, who may already have received state aid in previous years but still need to meet the current year’s deadline to remain eligible.
Don’t assume the federal FAFSA deadline is your state’s deadline. Missing a state priority deadline could affect eligibility for certain state grants or other financial aid, so check your state’s FAFSA deadline and any additional state-aid requirements.
Keep your StudentAid.gov Contact Information Current
With the IRS information-transfer process, it is important to keep your personal information on StudentAid.gov current and consistent with the information the IRS has on file. Differences in identifying information, including your mailing address, can cause problems when the FAFSA attempts to match your information with IRS records.
For example, if the mailing address on your tax return uses an abbreviation, make sure the address on your StudentAid.gov account is entered accurately and consistently. Before completing the FAFSA, review your StudentAid.gov account information and update it if necessary.
Once you enter student loan repayment, you will work with a federal student loan servicer. Make sure your contact information is also kept up to date with your loan servicer so you receive important billing and repayment communications.
Summary of the Most Common FAFSA Errors and Issues
The FAFSA is an important part of the college financial aid process, but completing it correctly is only one part of making informed college funding decisions. Errors, missed deadlines, incorrect information, and misunderstandings about how income, assets, and family circumstances affect financial aid can lead to costly consequences.
We recommend that every college-bound student complete the FAFSA. It informs colleges of your ability to pay and helps families structure debt properly. The FAFSA process has the reputation of being overwhelming, but if you take your time and avoid the mistakes listed above, it can be very manageable.
Ensure you sign the FAFSA using the correct FSA ID and password. Once you complete the FAFSA, you will receive a submission notification on the screen. You should save that. Within a few days, the student will receive an email notification that the FAFSA has been processed, and it will generate a report called the FAFSA Submission Summary (FSS). The new FSS form replaced the Student Aid Report (SAR).
The FSS will list all the information submitted, excluding the tax information imported from the IRS. Only the school’s financial aid officer can see that data and make adjustments. If an adjustment is needed, contact each college to inform them. Each school can use the same adjustment or create a new one for its financial aid decision.
The FAFSA and financial aid process is another step in making the right college decision. PayForEd’s suite of solutions helps students and parents make informed college decisions tailored to their specific situation.
PayForED works with families behind the scenes as a trusted resource to help families make more informed decisions about paying for college and managing student debt. To help families, PayForEd has planned a series of Virtual Financial Aid nights to help explain topics in the college funding and student loan repayment area.
