Although the FAFSA doesn't specifically say so, the question asking
about the number in college applies only to siblings attending a college
that participates in the U.S. federal financial aid programs. Some
schools abroad do, but if his sibling attended one that doesn't
participate then your answer of two in college was incorrect.
You could appeal this to the first college on the grounds that you had
no way of knowing about this distinction and might not have attended
that school due to the higher cost, but it's a long-shot. Especially
since he is no longer a student there.
Steven B. Blank
College Financial Aid Consultants
29 Ives Hill Court
Cheshire, CT 06410
(203)250-7761