Don’t Lie on the FAFSA
If you purposely provide false or misleading information on the Free Application for Federal Student Aid (FAFSA), you will have committed fraud. Most cases of FAFSA fraud are caught. The consequences of lying on the FAFSA are severe, and may include fines, jail time and expulsion.
FAFSA Fraud is Usually Caught
If you lie on the FAFSA, you will get caught.
College financial aid administrators have more experience in detecting fraud than families have in committing it. The U.S. Department of Education uses a sophisticated risk model to select FAFSAs for verification. College financial aid administrators may select additional FAFSAs for verification. Some colleges voluntarily select all FAFSAs for verification. FAFSAs are much more likely to be selected for verification than federal income tax returns for audit.
When a FAFSA is selected for verification, the family must supply original third-party documentation for the data elements on the FAFSA. This includes filing IRS Form 4506-T to have a tax return transcript sent from the IRS directly to the college. If there is any conflicting information, the financial aid office is prohibited from disbursing financial aid funds until the conflicting information is resolved. The college financial aid administrator may require the family to file an amended federal income tax return to resolve the conflicting information.
Even the slightest inconsistency may trigger an investigation. For example, if the student’s parents are divorced and the custodial parent lives in a different school district from the student, that will be considered conflicting information. Similarly, if the parents both claim head of household tax filing status. Or, if the parents report assets that are inconsistent with the amount of interest and dividend income reported on their federal income tax returns.
Often, fraud is reported by the student’s roommate, the parent’s colleagues or an ex-spouse. Fraud on the FAFSA can be reported to the Office of the Inspector General (OIG) at the U.S. Department of Education by calling 1-800-MIS-USED (1-800-647-8733). It can also be reported to the college’s financial aid office.
Consequences of Lying on the FAFSA
Lying on the FAFSA is a federal crime.
Penalties for fraud on the FAFSA include a $20,000 fine and up to 5 years in jail. The fines and jail time may be greater if there are multiple counts of fraud. This can occur if the fraud involves multiple FAFSAs.
That’s just the penalties provided by the Higher Education Act of 1965 [20 U.S.C. 1097]. The case may also be prosecuted under other violations of federal and state law, such as mail fraud and wire fraud statutes. Since institutional financial aid may also be affected, fraud on the FAFSA may result in felonious theft charges.
In addition to fines, the student and parents will be required to repay all of the student financial aid funds that were fraudulently received.
Lying on the FAFSA may be considered to be a violation of the college’s honor code. This can result in the student’s expulsion and the revocation of any awarded degrees.