Read this! You don’t want to mess with the Federal Govt.

Be very careful about following any unethical advice. Financial aid administrators are obligated to notify the US Department of Education when they encounter cases of fraud. (If they don’t, their school is held liable when the US Department of Education audits them.) Every school verifies the FAFSAs of at least one-third of their students, and some schools verify 100% of the financial aid applications. This is in contrast with the IRS, which audits only a very small percentage of tax returns. So if you lie on your financial aid forms, there’s a very good chance you’ll get caught.

The FAFSA includes the following warning on the front:

WARNING: You must fill out this form accurately. The information that you supply can be verified by your college, your state, or by the U.S. Department of Education.

You may be asked to provide U.S. income tax returns, the worksheets in this booklet and other information. If you can’t or don’t provide these records to your college, you may not get Federal student aid. If you get Federal student aid based on incorrect information, you will have to pay it back; you may also have to pay fines and fees. If you purposely give false or misleading information on your application, you may be fined $20,000, sent to prison, or both.

Schools are getting much better at catching fraud. For example, many schools now require parents who claim to be enrolled in college to not only provide proof of registration, but a copy of the paid tuition bill. Some go even so far as to verify the enrollment with the other school. This is because some financial aid consultants were advising parents to enroll at another school to qualify themselves as a member of the household enrolled in college and then let the enrollment automatically cancel through nonpayment. Similarly, many schools now require families to sign a release to let the school obtain the actual income tax returns from the IRS, because some families were providing false copies of their tax returns. Also, in cases of divorce or separation, financial aid offices ask for proof of legal separation, because some families have been falsely claiming to be separated in order to increase eligibility for financial aid. Financial aid administrators are especially suspicious when both parents live at the same address.