Senator Flanagan Warns Parents And Students Of Possible Financial Aid Scam

 

Senator John Flanagan (2nd Senate District), a member of the Senate Consumer Protection Committee, has joined with the New York State Consumer Protection Board (CPB) to warn parents of a potential financial aid scam. This warning urges all students and parents to exercise caution when dealing with companies claiming to help students win scholarships and other financial assistance for college.

"There are some who are looking to unfairly profit from students who are looking to head to college and parents must be aware of these scams. Being an educated consumer and knowing your rights is the best way to avoid getting ripped off. Before you sign up for anything, pay for anything or agree to anything, do your research and ask the experts," stated Senator Flanagan.

According to the CPB, there are private companies charging high fees for services that are generally free to the public. In addition, there are high-interest loans and scholarship scams being marketed to students and parents as they search for college aid in the weeks and months ahead.

The key to obtaining grants and low-interest loans from the government is the Free Application for Federal Student Aid, commonly known as the FAFSA. Although FAFSA is free, parents are unfortunately being lured into paying between $50 and nearly $2,000 to a company that will complete the application on their behalf.

Several web sites are currently operating with web site names that are very similar to the FAFSA address (www.fafsa.ed.gov) in order to lure them away from the government web site where the FAFSA application is available at no charge

Students and parents have also been invited to "free" seminars where college consulting firms pressure them into buying services they may not need or will have trouble accessing.

Some parents have also complained that some companies promise to offer "consulting services" to help a student choose a college. These consulting services, which can cost $2,000 or more, were not as personalized and specific as the companies described in their sales presentations. The problem is often compounded when consumers who try to get refunds find the process difficult.

"Scam artists often lure victims with phony guarantees that they can obtain a government grant or a college scholarship," said Mindy Bockstein, the CPB's Acting Chairperson and Executive Director. "Such 'guarantees' are a tip-off that this is a scam."

Other warning signs of potential scams include:
-demands that you pay an upfront fee;
-requests for credit card numbers or bank account information;
-claims that a company can offer "exclusive" information;
-promises to give you cash if you first pay a registration fee;
-offers for a lower interest rate if you pay a larger fee in advance; and,
-claims that the company will convert a loan into a grant – but only if you first pay a fee.

The CPB further warned parents that these private services may sell information about their customers to other companies. This can result in even more unwanted offers, including some financial aid and government-grant scams.

For parents and students who would like more information on college financing and additional tips about avoiding financial-aid scams, the CPB recommends the following web sites:

www.hesc.state.ny.us - New York State Higher Education Services Corporation

www.ed.gov/finaid - The U.S. Department of Education

www.finaid.com - FinAid, a non-government web site

"Free help is available at high schools and colleges and via the Internet and parents should take advantage of the free assistance. With one child in college now, I know how costly college is but I urge all parents to avoid any offer that looks too good to be true," added Senator Flanagan. 

Any parent or student who is interested in receiving additional information about financial aid in New York should click here to request financial aid brochures.
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