Applying for financial aid for college is confusing. Confused people make mistakes. These are the top 3 mistakes I see parents make when seeking college aid.

The First Mistake: not taking advantage of the financial aid system. The biggest blunder parents make is not filling out the college aid forms, especially the FAFSA form (Free Application for Federal Student Aid). And why don’t they do that? Mainly, it’s because they believe that they make too much money, and often they’re wrong.

Let me explain why you should fill out the financial aid forms. Firstly, if you want access to the low cost government loans, you have to fill out the forms. There’s no other way to get that money. Then there’s merit aid. Many colleges won’t consider you for merit aid unless you’ve filled out the financial aid forms. Even millionaires and "B" students qualify for that money, so you don’t want to miss out on that.

Regardless of what you’ve been told, fill out the FAFSA form.

The Second Mistake: is putting money in your child’s name. Putting money in your child’s name counts much more heavily against you than money in the parent’s name. Now your accountant may have a hard time with this, because she’s only concerned with lowering taxes. That’s good advice, perhaps, when your kids are young, but having money in your child’s name during the college years is going to cost you college aid. Also, be careful how much you let your kids earn in the year before they go to college. Kids are going to love this, parents perhaps not, but keep the student’s earnings below $3,700.

The Third Mistake: is looking at the sticker price rather than the out-of-pocket cost. Many private schools, let’s take Princeton for example, can cost less to attend than state schools. How can that be? Well, the sticker price at Princeton may well be $50,000+, and the sticker price at a state school, may be "only" $25,000. The sticker price isn’t the important number. The most important factor is how much college aid those schools give. Now in the case of Princeton, they may well give 30,000 or 35,000 dollars of aid, when the state school doesn’t have much money, and maybe can’t give that much. So Princeton, and other top schools all over the county like it, is able to give more aid, which is going to reduce your out-of-pocket costs.