Pitfalls of Financial Aid-How to Steer Clear of Scams
Forbes recently estimated the financial aid industry to be a $129 billion business. When there’s that much at stake, you can count on some high-pressure schemes designed to skim some of that for themselves, at your expense.
Here are some guidelines to keep from getting burned on college financial aid. You can beat the scam artists by following a few simple principles.
Don’t pay for free information
By far the most common shady practice is technically legal-but that doesn’t mean it’s good for your pocketbook. There are hundreds of businesses out there that exist to sell you financial information that’s readily available for free. These organizations charge anything from $100 to many thousands, with one organization charging fees over $10,000. In most cases, these companies aren’t doing anything other than running your information through free scholarship sites. (See list of resources below.)
Beware “free” financial aid seminars
If a company’s going to pay the expense of renting seminar facilities, you can bet that they expect to get a return on that investment. This is often obtained by pressuring attendees to pay for unnecessary products with aggressive hard sell tactics. If you do decide to attend a financial aid seminar, leave your credit card at home and promise yourself you’ll thoroughly investigate the alternatives before purchasing any product from the company. If you have a hard time saying no to salespeople, you’re better off skipping these expensive “free” workshops.
Max out federal loans before applying for a more expensive private loan
Federal student loans have modest interest rates and highly favorable terms. Some federal loans are available regardless of financial need, so be sure you’ve taken full advantage of them before borrowing anything from a private lender.
If you do get some additional money from a private lender, be sure you’ve checked out at least three different lenders and compared loans and terms . . . there can be a huge variation, and the biggest lender names don’t always offer the best deals.
Take advantage of your college’s financial aid office
These financial aid professionals have seen every scam under the sun, and they’re there to help you fund your education through legitimate means. Ask them before you give a single dollar to a third party. For example, they’re usually happy to help you fill out the FAFSA for free, while a third party can charge a hefty fee to walk you through the process. (See the resource list below for Web sites that also offer free help with the FAFSA.)
Don’t let your college dreams make you vulnerable to con artists. You can get all the financial aid you need without spending money on unnecessary services. Get the real information and leave the scams and schemes behind.
Free scholarship sites
These sites all offer legitimate free advice on finding scholarships, filling out the necessary paperwork, and creating a financial aid plan.
- CollegeBoard
- College Goal Sunday Includes free professional help filling out the FAFSA
- FastWeb
- FinAid
- Making It Count for Students! Articles written by students and education professionals about virtually every aspect of applying to college.
- Also see Making It Count for Parents! for financial aid and application tips.
- Princeton Review Tuition calculator, FAFSA strategies and more.
