Many get caught in college aid scams
By Greg Wiles
Advertiser Staff Writer
By Greg Wiles
The parents of a McKinley High School student recently learned the hard way that you need to do your homework when it comes to applying for financial aid.
The family, anxious to take the right steps for their daughter, paid about $1,000 to a company promising to help obtain scholarship and other financial aid for the college-bound student, according to McKinley counselor Cynthia Kunimura. Most of what the family received as information is available from free sources, she said.
"There are lots of scams out there," said Kunimura, who warns students against using companies that charge for scholarship and financial aid advice.
"Parents, because they're trying so hard to do what's best for their kids, are being caught."
Other high school college counselors similarly caution against using fee-based financial-aid consulting services saying they don't see why parents should pay for information that's often available for free. Such warnings are coming at the height of the scholarship and financial-aid application season for college-bound high school seniors.
Nationally, the number of complaints about scholarship and financial aid scams filed with the Federal Trade Commission rose almost sevenfold, from 670 in 2003 and 4,486 in 2004. The FTC and U.S. Department of Education have stepped up their public awareness efforts in the past five years, publishing booklets, Web sites and posters.
Locally, counselors said they don't think the scams will ever disappear, though they've received fewer anecdotal reports about them in the past year. Still, some parents are sucked in by direct-mail and e-mail pitches that can range from scholarship offers to help applying for financial aid to lists of available scholarships. Some of the offers are sent to sophomores and juniors to hook families early in the college-planning process.
"Families get duped into spending a lot of money they don't need to," said Belinda Chung, a college counselor at St. Andrew's Priory.
"They're preying on the vulnerability of families."
The fees charged vary depending on the service offered, starting at about $30 for a list of scholarships to more than $1,000 for helping to identify financial aid opportunities, filling out forms and negotiating with college student aid offices.
Counselors said most parents aren't duped by the letters. Still, the scams can generate millions of dollars for unscrupulous companies. Businesses operating as the College Funding Center and the College Funding Group took in $15 million from allegedly defrauding 12,000 people, according to a settlement obtained last year by the FTC.
The two companies allegedly promised students they'd obtain all the money they needed to attend college while reducing tuition expenses by obtaining scholarships and grants, according to the FTC complaint.
Another company discussed in the FTC report was National Student Financial Aid, which the FTC says took in about $10 million from about 40,000 people. The FTC complaint claimed the company sent students letters stating they were selected by its "College Review Board" as being eligible for financial assistance.
The students and parents were allegedly invited to an interview during which they were asked to pay as much as $1,250 for a financial-aid strategy and help preparing applications.
"In reality, National Student Financial Aid provided only generalized information, and the 'customized' strategies were not tailored to individual financial situations," an FTC report said. "Much of the materials consumers received consisted of readily available public information."
Any mailing that asks for a processing, entry or transaction fee should be scrutinized carefully, said Wren Wescoatt, executive director of College Connections Hawaii, a nonprofit organization that tries to improve educational opportunities for local students. College Connections Hawaii maintains a free listing of 350 scholarships for Hawai'i students on its Web site.
Fees are "the big red flag," said Wescoatt. "If you have to pay anything, generally it's not legitimate."
Counselors recommended students or parents check with them if they are in doubt. Still, some students think they might benefit from services identifying potential scholarships, thinking the services may save them time, said Jean Fukuji, Radford High School college and career counselor.
She said she believes such services provide students a list of scholarships that can be found on the Web or elsewhere for free. Students then apply for scholarships on their own.
"They might guarantee finding five to 10 scholarships," Fukuji said. "But finding them and getting them are two different things."
Scholarships available to Hawai'i students can be found at:
DEADLINES TO APPLY FOR AID COMING UP
It's prime time for college-bound students and their parents seeking financial aid as deadlines approach for scholarship and aid applications. Most scholarship deadlines are March 1, said Wren Wescoatt, executive director of College Connections Hawai'i, a non-profit group.
"Scholarship scams are an issue," Wescoatt said. "But students not filling out their financial aid form or not filling it out on time is a much larger issue."
Wescoatt recommends families start by completing the "Free Application for Federal Student Aid" as soon as possible, even if they have to put down estimated taxes because they might not have filed their income taxes yet.
The application is required by most schools.
There is no fee to submit this form, and families should avoid companies that charge for help filling it out and filing it, high school counselors said.
If they haven't already done so, families can search for scholarships on the Internet.
One of the sites recommended by high school counselors is www.FastWeb.com.
High school college counselors also are a good source for such information if families don't have Web access.
Reach Greg Wiles at email@example.com.