When it comes to filing the Free Application for Federal Student Aid (FAFSA), accuracy is everything. But just as important as knowing what to report is understanding what not to include.
Too often, families overreport their financial assets by including retirement savings, home equity, or other non-required data. These honest mistakes can significantly inflate the Expected Family Contribution (EFC), reducing financial aid eligibility by thousands of dollars.
At College Benefits Research Group (CBRG), we guide families through every line of the FAFSA, ensuring they include only what is required—and nothing that could unnecessarily hurt their aid package. Here’s what you need to know.
Why It Matters What You Report—and What You Don’t
The FAFSA uses its own set of rules to assess income and assets. These rules differ from those used by the IRS for tax reporting.
As a result, it’s easy for families to include information that the FAFSA doesn’t ask for, especially if they’re simply copying over numbers from tax returns or financial statements.
Overreporting can:
Inflated Expected Family Contribution (EFC) Can Lower Aid
The Expected Family Contribution, or EFC, is a number used by colleges to determine how much financial aid a student is eligible to receive.
The higher your EFC, the less aid you’re considered to need. Overreporting assets—like retirement savings or home equity—can artificially raise this number, significantly reducing the grants and need-based aid your student might otherwise qualify for.
CBRG helps families avoid this pitfall by ensuring only the required assets are reported on the FAFSA, keeping your EFC as accurate—and as low—as legally possible.
Delays Caused by Reporting Inconsistencies
When the data you report on the FAFSA doesn’t align with IRS records or contradicts other parts of your application, it can cause delays in processing. This not only postpones your financial aid award letter but could also affect your ability to meet important college-specific deadlines.
At CBRG, we pre-screen every submission for potential red flags and provide accurate documentation support to reduce delays.
Unnecessary FAFSA Verification Requests
Overreporting or entering conflicting information can increase the likelihood of being selected for verification. This process requires submitting additional documents and responding to financial aid office inquiries, which can be stressful and time-sensitive.
CBRG proactively helps families avoid verification triggers by ensuring applications are complete, accurate, and in line with current FAFSA guidelines.
CBRG helps families understand which assets are assessed, which are excluded, and how to avoid misclassifying financial resources. We make sure your FAFSA accurately reflects your aid-eligible financial picture.
Retirement Savings: A Common but Costly Mistake
Retirement accounts like 401(k)s, IRAs, Roth IRAs, and pensions should not be reported on the FAFSA as assets. However, many families mistakenly include these balances because they appear on tax returns or bank statements.
Including retirement assets can unfairly inflate your EFC. For example, a $100,000 401(k) account reported in error could reduce your aid eligibility by thousands of dollars.
CBRG works with families to clearly separate retirement funds from reportable investment accounts. We also advise on how contributions to retirement accounts are treated (they may count as untaxed income if made during the FAFSA tax year).
Home Equity and Primary Residence: What’s Excluded
Your family’s primary home equity is not reported on the FAFSA. This is a major difference from the CSS Profile, which many private colleges use and which does include home value.
Families who include their home equity on the FAFSA may mistakenly inflate their reported net worth, disqualifying themselves from need-based aid.
CBRG clarifies these distinctions during the application process. We also help families applying to both FAFSA and CSS Profile schools ensure they handle home equity reporting correctly across both platforms.
Small Family-Owned Businesses and Farms
FAFSA rules exclude small businesses and farms from asset reporting if they are family-owned and employ fewer than 100 full-time workers. This exclusion is frequently overlooked.
Families who report the value of a qualifying business or farm can significantly increase their EFC unnecessarily. In one CBRG case, a family that mistakenly included the value of their small retail business saw a major drop in aid eligibility until we corrected the error.
CBRG verifies business size, ownership, and operational structure to determine whether it qualifies for exclusion. If it does, we ensure it is omitted from the FAFSA.
Personal Items and Household Goods
You do not need to report the value of personal items such as:
- Furniture
- Vehicles
- Jewelry
- Electronics
- Clothing
The FAFSA is focused on liquid assets and investments—not everyday household goods. These are not considered indicators of financial strength and do not need to be included.
Still, families sometimes overreport due to a misunderstanding of what “assets” really mean. CBRG educates families on exactly what the form requires and helps avoid this common misstep.
Life Insurance Policies and Annuities
Another area of confusion involves life insurance and annuities. The FAFSA does not require the reporting of:
- Cash value of life insurance policies
- Term life insurance
- Non-retirement annuities
These financial products are considered non-reportable assets, yet many families mistakenly include them, especially when completing the form without professional guidance.
CBRG helps clients distinguish between what needs to be disclosed and what should be left off. We also advise families who own complex financial products on how to document them properly for aid purposes.
FAQs: What Not to Report on FAFSA
No. Retirement account balances should not be listed as FAFSA assets.
The FAFSA excludes the equity in your primary residence. Do not include it.
No. Vehicles and other personal property are not considered reportable assets.
Only if the business has more than 100 full-time employees or is not family-controlled. Otherwise, you can exclude it.
No. These financial instruments are not included on the FAFSA.
Yes. Student assets are assessed at a much higher rate (up to 20%) compared to parent assets (up to 5.64%).
You can log in to your FAFSA and submit a correction. CBRG can help you identify and fix reporting errors quickly.
How CBRG Helps You File FAFSA the Right Way
Filing FAFSA accurately means knowing not just what to include, but also what to leave out. This is where CBRG makes a powerful difference.
Our team offers:
Detailed FAFSA Reviews
We go line by line through your FAFSA to catch and correct any errors, omissions, or unnecessary disclosures that could affect your aid.
Clear Guidance on Exclusions
We explain exactly what not to report—from retirement accounts to personal property—so your financial profile is represented accurately.
Strategic Asset Positioning
For families with a mix of reportable and non-reportable assets, we help you organize finances in a way that maximizes aid eligibility.
Corrections and Appeals
If you’ve already submitted your FAFSA and made a mistake, we guide you through corrections and help file appeals when necessary.
One verified CBRG client shared that they originally included their life insurance cash value on the FAFSA and saw a sharp drop in their aid eligibility. After working with CBRG to resubmit with accurate data, their student qualified for over $10,000 more in institutional grants.
With expert support, your family can avoid the hidden pitfalls of overreporting and secure more of the aid you deserve.
Schedule a consultation with CBRG today and make sure your FAFSA works for you—not against you.