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That Free Financial Aid Seminar May be Just a Worthless Sales Pitch

Mark Kantrowitz

November 18, 2011

Error: When the online FAFSA validates the Social Security number online, it’s just examining the check digit. You can still enter a wrong Social Security number.

The Social Security number does not include a check digit. This is a key flaw in the design of Social Security numbers, which causes digit transpositions and substitutions to yield someone else’s Social Security number.

The online validation of Social Security numbers is based on a database comparison with the Social Security Administration. The name, date of birth and Social Security number must match. This is why it is important to use your legal name as it appears on your Social Security card, not a nickname.

Error: There is a $10,000 fine for fraud on the FAFSA.

The fine is $20,000, not $10,000, per 20 USC 1097(a), which states “Any person who knowingly and willfully embezzles, misapplies, steals, obtains by fraud, false statement, or forgery, or fails to refund any funds, assets, or property provided or insured under this subchapter and part C of subchapter I of chapter 34 of title 42 or attempts to so embezzle, misapply, steal, obtain by fraud, false statement or forgery, or fail to refund any funds, assets, or property, shall be fined not more than $20,000 or imprisoned for not more than 5 years, or both, …”

The criminal penalties for fraud are also mentioned as part of the signature statement on the print and online versions of the FAFSA.

Error: The age of the older parent is used to lookup in a mortality table.

The FAFSA does not use mortality tables as part of need analysis. Rather, the age of the older parent is used to determine the size of the Asset Protection Allowance. The asset protection allowance is based on the present value cost of an annuity which would provide supplemental income at age 65, adjusted for inflation, equal to the difference between a moderate family income (as determined by the Bureau of Labor Statistics) and the current average Social Security retirement benefits.

Error: The financial aid formula’s income protection allowance for a child is $3,200 plus 50 cents of every dollar.

The income protection allowance for a dependent student for 2012-13 is $6,000. Half of all student income above the income protection allowance will increase the expected family contribution (EFC), thereby reducing aid eligibility. The income protection allowance has never been $3,200. It was $3,080 in 2008-09 and increased to $3,750 in 2009-10, $4,500 in 2010-11 and $5,250 in 2011-12.


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