Every student preparing for college is struck by the reality of the high cost of higher education. It might be tempting to lie about the Fafsa. However, lying about Fafsa can have serious consequences. You could face criminal charges of fraud and, most of the time, you will have to repay any financial assistance you received under false pretences. Learn more about this issue and how you can avoid these issues when applying for financial assistance.
What is Fafsa?
FAFSA stands for Free Application for Federal Student Aid. This is a form that every student attending or planning to attend college can fill out for free to see if they qualify for federal financial aid. The types of financial assistance you may receive include Pell Grants or other funds that you do not have to repay as well as federally backed funds. student loans.
Whether or not you qualify for assistance through this process depends on a number of factors, including household income. This is one of the most common things people lie about on the Fafsa, as lower income can mean increased financial aid options.
Even if you are not eligible for financial aid through Fafsa, there are other programs that can improve your financial situation. These include private student loans, scholarships or other awards to help pay for your college education. If you are considering taking advantage of private loans, be sure to take care of other debts to position you in the best possible conditions.
What are the penalties for lying about Fafsa?
The Higher Education Act of 1965 provides for penalties of up to five years in prison and a $20,000 fine if someone is caught lying on the Fafsa. You will also have to repay any financial aid, so the monetary consequences are even greater. In many cases, the Fafsa is based on parents’ income and information. In this case, it would probably be the parent who would suffer the consequences, unless it is proven that another party filled out the form without their knowledge.
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The cost of college and the seemingly robotic nature of the online Fafsa form are two reasons why people are tempted to try to cheat the system. But Mark Kantrowitz says no one should think the Fafsa fraud is easy to avoid. “College financial aid administrators are more skilled and experienced at detecting lies than families are at committing them,” he says.
Kantrowitz says there are many ways to identify discrepancies on the Fafsa, and often the student actually lets the cat out of the bag — either on purpose or by accident. “When a school has credible information about fraud, they are obligated to investigate,” he says.
What happens if your Fafsa is selected for verification?
About a third of all Fafsa forms are selected for verification. When this happens, the college financial aid office asks you for additional documents. You may also need to complete verification forms. Refusing to provide this information may mean forfeiting access to financial aid funds.
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The verification process often isolates one or more data elements, not the entire form. Some types of information that can be verified include income, taxes, education tax credits, child support, high school completion status, or the number of members in your household. You can reduce the chances of an audit by importing your Fafsa information directly from the IRS data recovery tool. Information in this tool that has not been modified by you will never require verification.
How to fill Fafsa to get the most money?
The best way to complete the Fafsa is honestly. The questions on the form usually don’t come with answers that could be one or the other, and trying to answer them in a way to get more money could mean you’re lying or rigging the numbers.
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Does Fafsa verify your bank accounts?
Fafsa does not check anything, because it is a form. However, the form asks you to provide certain information about your assets, including checking accounts and savings accounts. Whether or not you have a lot of assets may reflect your ability to pay for your education without financial aid. If your Fafsa is selected for verification, you may need to provide documentation proving that the amounts you entered for bank accounts were correct.
Does Fafsa affect my tax return?
Your Fafsa form does not directly impact your tax return. Your tax return – including whether you have filed it and paid your taxes – affects your ability to complete the Fafsa and receive financial assistance.
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However, certain types of financial assistance may be considered taxable income. This may include some work-study payments and grants or scholarships which are used to cover living expenses. If your rewards are considered taxable income, you must report them on your next tax return form, and they could affect the amount of the refund you receive.
How your credit plays a role in college funding (and vice versa)
If you’re not getting enough federal student aid to fund tuition and can’t pay the bill without a loan, there are private options. Make sure your credit situation is in order before applying.