Liz Weston

LOS ANGELES (Reuters) – Millions of families will fill out a key financial aid form in coming weeks, many for the first time. Unfortunately, mistakes on the Free Application for Federal Student Aid (FAFSA) are easy to make, education experts said.

Here are some of the most costly errors to avoid:

1. Failing to file

Too many people incorrectly believe they either don’t need or won’t get aid.

The American Council on Education found that one of every five dependent low-income students and one in four independent low-income students — those most likely to get Pell Grants destined for the neediest students — fail to apply for aid.

At the other end of the scale, families with six-figure incomes may not file, not realizing that income and assets aren’t the only criteria used, said Mark Kantrowitz of Edvisors Network. Family size, the number of children in college and the age of the oldest parent are taken into account, which can result in need-based aid even for wealthier families, particularly at costlier schools.

Even if no need-based aid is forthcoming, completing the FAFSA gives families access to federal student loans, which are much more consumer-friendly than private loans.

2. Waiting until you file your taxes

Your FAFSA form requires 2013 income tax data, but waiting until you’ve filed your return can be an expensive mistake. Some schools offer bonuses for early filers, while a lot of financial aid is first come, first served, said W. Kent Barnds, executive vice president at Augustana College in Rock Island, Ill.

Late filing puts families “at the back of the line” for aid, said Todd Weaver, a former college financial aid official and partner in Strategies for College, a Hanover, N.H.-based consulting firm.

It’s better to use estimated tax numbers so you can file the FAFSA as soon after January 1 as possible, then correct it with the actual data once your return is filed.

3. Not including all possible colleges

Life is uncertain, so cover your bases. Have your FAFSA results sent to every college you’re considering, even the ones that seem unlikely to be your final choice. One of those long-shot colleges may surprise you with an excellent aid package that could sway your thinking. Alternatively, a reversal in your situation could have you seeking out different choices.

4. Using the wrong parent

Divorce, joint custody and remarriages can create confusion about which parent’s income and assets should be used in the FAFSA form. A quiz at CollegeUp.org can help families figure out who their “FAFSA parent” should be.

Note that a little planning can have a big impact. Let’s say a fictional student named Ramon lives much of the year with his mother and her husband. Ramon’s stepfather makes a good living, but has made it clear he won’t help with college costs.

That’s unfortunate, since the stepfather’s high income will reduce Ramon’s financial aid package. If Ramon instead spent most of the year living with his lower-income father, his aid package would be based largely on his dad’s finances.

5. Not getting help

The FAFSA’s complexity can be daunting, Kantrowitz said, especially to lower-income families who don’t have experience applying for college — in other words, those most likely to benefit from aid.

Fortunately, there are ways to get free, expert help. The College Goal Sunday national program (collegegoalsundayusa.org)

offers events in most states. Many colleges and universities also schedule “boot camps” to help families tackle the form, Barnds said.

6. Getting the wrong kind of help

Some insurance agents tout themselves as college planning specialists to sell annuities and expensive life insurance, said Lynn O’Shaughnessy, author of “The College Solution.”

Before you buy any insurance product to hide or reduce your assets, run the idea past a fee-only financial planner or a CPA familiar with college planning.

7. Meekly accepting an outsized “expected family contribution.”

One family Weaver knows saw their financial aid package all but disappear after the college compared IRS transcripts to the family’s FAFSA filing. The family had correctly excluded from their income a 401(k) distribution that was rolled over into an IRA. The college incorrectly added the distribution back into their income and shrank their award.

“They had to talk to three different people (at the college) before they got to the director of financial aid who realized it was a mistake and overruled it,” Weaver said.

Also, the FAFSA doesn’t provide a way to explain special circumstances, such as a recent layoff, cutback in hours or death of a wage earner, Kantrowitz said. If your 2013 income isn’t representative of your current circumstances, you can ask the college financial aid office for a “professional judgment review” that may result in a lower expected family contribution.

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Editing by Beth Pinsker and Stephen Powell)