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Published: Jan 12, 2016
puzzle and money
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This story was updated 9/29/2017.

To get into college, students have to pass all kinds of tricky tests of grammar, history, math, and science. To pay for college, students and their parents have to ace the Free Application for Federal Student Aid, which has a surprising number of confusing questions

Despite government efforts to simplify the FAFSA, there are more than 100 questions on the form. At least a dozen are easy to get wrong, according to financial aid advisers. Answering even one of those tricky question incorrectly can cost students thousands of dollars in missed financial aid, notes Kal Chany, author of Paying for College Without Going Broke.

To make sure you don't flunk the FAFSA, check your answers against the suggestions of our experts:

  • Questions 24 and 25: Schooling of parents. Don’t brag! If either parent attended but did not graduate from college, then just click on high school, since that is the last level of school the parent completed. There are some extra scholarship programs for people whose parents never finished college.
  • Question 31: Work study. Answer yes even if you think you don’t want to work while at school. Answering yes doesn’t obligate you to take a work-study job, but it keeps you in the running. In general, work-study jobs are the best way to raise extra money while at college. Unlike off-campus jobs, work-study earnings won’t affect your aid eligibility in future years. Also, research shows that students who spend 10 to 12 hours a week (but not much more) on work-study jobs do better in college than those who don’t work.
  • Questions 41 and 42: Student's savings and investments. Are you about to enter a large number for either of these questions? Stop and make some adjustments first, if you can. Every dollar of savings in the student’s name reduces need-based aid by about 20 cents, while money in parents’ accounts—even if it's designated for the student—reduces need-based aid by a maximum of 5.64%. So you can significantly increase your eligibility for need-based aid by moving any money the student has in savings, investment, or UGMA accounts into a 529 college savings account, advises financial aid expert Mark Kantrowitz. Even though 529 college savings accounts are designated for the student, they are considered a parental asset (which you’ll report on the FAFSA in question 91.) Notice that the question asks how much the student’s savings and investments are worth “as of today.” That means you have until the day you fill out your FAFSA to move the student’s money into a 529. Here's more detailed advice on how to report savings.
  • Questions 61-64: Parent name. You may think this is a no-brainer. But the FAFSA has some quirky rules about who is technically a “parent.” Parents who live in the same household–even if they are not married or are not financially supporting the student—have to provide their financial information on any FAFSA filed for a student under the age of 24. There are a few exceptions: Parental information is not required for students who are married, soldiers, veterans, or parents themselves. Any other exemption for a student under the age of 24 requires proof of abandonment, such as a court ruling. If the student's parents are divorced or separated, and living separately, only one parent needs to fill out the financial information in the FAFSA. Which parent? The one with whom the student lives the most—in other words, at least 51% of the time. The FAFSA does not care which parent claims the student as a tax deduction or which parent has the least or most money.
  • Questions 90 and 91: Parent savings and investments. If you are preparing to enter a large number for either of these questions, take a few minutes to make sure you're not over-reporting, advises Chany. One of the most common—and costly— mistakes people make on the FAFSA is double-reporting family savings as assets of both the parents and child, he warns. So make sure you’re only reporting each asset only once—and preferably as a part of the parents’ assets. Also, Chany reminds parents that buried in the FAFSA's fine print are rules that exempt retirement savings and the net value of the home you live in. So the correct answer to question 91 will include the value of any taxable investment accounts and 529 savings plans but not the value of any 401(k)s, IRAs, life insurance, or pensions. Also, if the parents are divorced or separated, remember to only include the savings and investments of the one parent with whom the student lives the most.
  • Question 92: Value of small business. The correct answer is probably $0, says Paula Bishop, a CPA and private financial aid adviser in Bellevue, Wash. Read the question carefully and you’ll see that the FAFSA only asks about the value of small businesses with more than 100 employees. Owners of any business with 100 or fewer employees should enter $0.