One of the most common mistakes is in the reporting of savings and investment assets. Make sure that you understand who the owner of the asset is. Assets that are owned by the student reduce need-based aid by more than assets that are owned by the parents. Since the FAFSA asks for the asset information “as of today”, you may be able to move some of the student’s assets prior to completion of the form. For example, a savings account in the student’s name could be moved into a 529 savings plan owned by the parent. A 529 savings plan should be reported as an asset of the owner not the beneficiary.
Retirement plans such as 401(k), IRA, Roth IRA, and pensions are exempt from being reported on the FAFSA. Make sure you are not including them as an asset. In addition, you are not required to include life insurance values or the value of your home.