Navigating the financial section on the Free Application for Federal Student Aid, or FAFSA — including assets and investments — can be confusing for filers, especially when it comes to parental information.
Here are five common myths filers should know about parent information on the FAFSA.
Myth 1: My Parents’ Income Is Too High
Sixty-three percent of undergraduate families who earned $150,000 or more chose not to file the FAFSA for 2023-2024 because they believed their income was too high to qualify for any aid, according to the annual Sallie Mae/Ipsos survey, How America Pays for College.
However, there’s no income cut-off to file the FAFSA and it’s free to fill out, experts say.
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“The FAFSA is not only an application for federal student aid, it’s also the application for federal student loans,” says Katie Conrad, executive director of the Office of Scholarships and Financial Aid at Georgia Institute of Technology. “And you don’t even need to demonstrate financial need to qualify for an unsubsidized student loan or a Parent PLUS loan.”
Some states and colleges also use information from the FAFSA to award scholarships or grants.
“So while you may not qualify for a federal Pell Grant, depending on the institutions where you’re attending, you may demonstrate financial need at a higher-priced institution — a school that has a higher cost of attendance — even if you have a higher student aid index as a result of the FAFSA,” Conrad says.
Myth 2: Having Undocumented Parents Disqualifies You From Submitting the FAFSA
Having undocumented parents “may add a few steps to the FAFSA process, but it really shouldn’t prevent you from filling out the FAFSA,” says Kate Wood, a lending expert at NerdWallet, a personal finance company.
As of December 2023, contributors — a parent, stepparent, spouse or anyone else required to provide information on a student’s form — can create an FSA ID without a Social Security number. The FSA ID is used to create a StudentAid.gov account and serves as a filer’s electronic signature.
“At no point does the FAFSA ask about your parents’ or other contributors’ citizenship status,” Wood says. “You are not overtly revealing something by doing this.”
However, there may be additional questions to verify the identity of a contributor. When inviting a contributor to fill out the FAFSA, students should select the box that indicates the contributor doesn’t have a Social Security number. Individual Taxpayer Identification Numbers should not be put in the Social Security number field.
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“Previously there was the guidance that you entered all zeros,” Conrad says. “That’s no longer the case. You just have to check the box if the parent doesn’t have a Social Security number.”
When creating the FSA ID, she recommends, screenshot the information you’ve entered to ensure it matches in the demographic section.
“If there is a mismatch, even down to if you live on Westover Drive and you spelled out ‘Drive’ and then when you go to fill out the FAFSA you just do ‘Dr.’ instead of the full word, it’ll mismatch,” Conrad adds.
Myth 3: Filing the FAFSA Means You Are Agreeing to Pay Something
Choosing to file the FAFSA does not mean a student or parent is agreeing to pay anything, experts say.
“You are simply providing your financial information,” Wood says. “By signing the FAFSA, you are agreeing that the information that you provided is correct to the best of your knowledge. You are not signing a bill. You’re not signing an invoice. You’re not ordering anything.”
Myth 4: College Savings Will Negatively Affect Federal Aid Eligibility
Savings are considered on the FAFSA, but they are “treated quite favorably,” says Martha Kortiak Mert, COO of Saving For College, which aims to help families with college costs.
“They really have a minimal impact when you consider overall,” she says. “The reality is most families will be much better off if they have money set aside and saved to supplement whatever they might get in financial aid, which will likely be student loans.”
For instance, a 529 plan — whether owned by a parent or dependent student — is considered a parent asset on the FAFSA. Parent assets make up a maximum of 5.64% of the FAFSA formula, compared to 20% for student assets, according to Kortiak Mert.
[Read: How to Avoid Scholarship Scams.]
The sooner you start saving for college, the better, she adds.
“You’re going to benefit from it,” Kortiak Mert says. “Not just from the money you contribute, but really you’re going to benefit from the compounding that happens as you earn money on your investments in a 529 plan. So if you have a limited amount of time to save, you just don’t get the benefit of that, particularly if it happens to be sort of a down market or a volatile market or something when you go to invest. In which case, you may just choose to go to something that is a much safer type of investment that’s going to have a very low return.”
However, it’s never too late to start saving, experts say.
“If you haven’t started saving and you’re getting to high school, you still have four years ahead of you,” Kortiak Mert says. “If you can make a commitment to set some money aside every month, you’re still going to set aside a decent amount of money.”
Myth 5: All Aid Offers Must Be Accepted
Thirty-six percent of respondents regret the amount of money they borrowed in student loans, according to a 2024 NerdWallet survey. In the same poll, 1 in 5 borrowers believe they took on more debt than needed just because it was offered.
When you are offered any form of financial aid, you don’t have to accept it, Wood says.
“You can choose to accept everything,” she says. “You can choose to accept nothing. You could say, ‘I want this grant or this scholarship, but I’m not interested in this loan.’ That is really up to you. … So you’re not making any kind of commitment. You’re not binding yourself to anything just by filling out the FAFSA or by receiving an estimate of how much aid or receiving an offer. You’re not bound to that until you actually go ahead and go through to accept those offers in all or in part.”
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5 Myths About Parent Information on the FAFSA originally appeared on usnews.com
