How a Financial Aid Mix-Up Created Thousands of Unwitting Paper Millionaires

Moneybox
A blog about business and economics.
July 8 2014 4:49 PM

How a Financial Aid Mix-Up Created Thousands of Unwitting Paper Millionaires

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FAFSA might think you have this much money ...

Photo by Noel Celis/AFP/Getty Images

Remember that thing called the decimal point? Federal financial aid applicants are relearning its value the hard way. Bloomberg reports that at least 165,000 filers have unwittingly become millionaires on paper after ignoring instructions in the FAFSA application to report their income and assets without the cents. In other words, someone who made $51,678.92 in 2013 should have reported that income as $51,678.

What happened to a lot of people was that they went ahead and included the $0.92 or other cents amount in their reported figures. But when the FAFSA system processed their entries, it got rid of the decimal point and interpreted the amount as $5,167,892—multiplying their income by 100. Here's a screenshot of the PDF version of the FAFSA so you can see what we're talking about:

fafsa_mixup
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According to Bloomberg, the problem came about because FAFSA expanded the numeric field for adjusted gross income from six digits to seven. People with five-digit incomes used to get a warning if they tried to include cents that they were entering too many figures. But with the seven-digit capacity, those mishaps have gone unnoticed by the system and many of its users.

Officials at the National Association of Student Financial Aid Administrators told the Chronicle of Higher Education that most colleges will have at least one if not hundreds of students affected by the mishap and will need to reprocess their FAFSA forms to adjust for the mistake. On the bright side, fixing the error will make those accidental millionaires a lot more likely to get the financial aid they deserve.

Alison Griswold is a Slate staff writer covering business and economics.

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