I understand it is an S Corp, not a partnership However, fafsa/college may not. S Corp is taxed much like a PS (pass thru of income/expense). Both give K1s to shareholders. However, the S Corp pays fica, whereas for a partnership, that would be self employment income/tax.
Perhaps they are confusing the 2 and imputing as though you paid self employment taxes on all of your S Corp K1 earnings.