The College Financial Advisory has been sending official looking letters encouraging parents of Wisconsin college students to pay $49 to apply for financial aid when in reality they are asking for a fee to receive information on financial aid.
Mark Kantrowitz, publisher of Finaid.org, wouldn’t comment on the legitimacy of the specific letter but noted there are no “legitimate” private student loans that charge a fee for their services.
“If someone tells you to pay money to get student loans, it is probably a scam,” Kantrowitz said.
According to Kantrowitz, the letter asks students to send the fee along with a r?sum? describing the student’s nationality, academic successes and extracurricular activities. In return, the CFA sends the student a list of available financial aid opportunities based on the student’s credentials.
The CFA then guarantees the entire processing fee will be returned to students who do not qualify or receive financial aid money in a certain amount of business days, Kantrowitz said.
“This is potentially problematic,” Kantrowitz added. “A scholarship cannot guarantee something that is based on your performance because they have no control over who the scholarships give awards to so they can’t guarantee you will win anything.”
Kantrowitz said students should steer clear of a scholarship organization charging a fee to apply for or receive information.
“Even if they give out the money, your chances of winning that money are so small that you’d be better off keeping that fee and using that fee to pay for education,” he added.
Ron Ronnenberg, financial aid advisor for University of Wisconsin-Green Bay, noted these types of scams occur every year when parents begin applying for financial aid and paying semester tuitions.
“There are a lot of scams out there; there’s academic scholarship scams and athletic scholarship scams, and they’ve been going on for a very long time. The only thing that changes is what they charge,” Ronnenberg said. “Everybody is at risk of [these scams] if they don’t read carefully.”
Ronnenberg added first-year students and parents are more susceptible to falling victim to the scams because they lack background on higher education and are not yet aware of the multitude of free resources that can be found both at the colleges and on the Internet.
“They do a very good job of making their letters sound very professional,” Ronnenberg said. “And we try to warn parents and students as much as possible.”
Kantrowitz agreed scholarship scams are a growing problem that need to be addressed and advises students to contact their financial aid advisors and councilors or use online websites sponsored by advertisements or other outlets that do not require a fee for their services.
Tips to avoid financial aid scams, such as “If it sounds too good to be true, it probably is” and “Spend the time, not the money,” can be found on the FinAid website at www.finaid.com. Other online outlets include the Petersons database and the College Board database.
