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Featured Advisor



Kim Butler
President

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX



BIOGRAPHY:
I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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College Financial Aid Searches Can Make Families Vulnerable to Fraud

A search for college financial aid can lead parents and students into the hands of scam artists.

| BY Adriana Reyneri

Companies that guarantee they can find a family college financial aid may be fraudulent, warns the U.S. Department of Education, which receives numerous complaints each year from parents and students who say they did not receive the help they expected from a private scholarship service.

 Families desperate for funding are vulnerable to fraudsters who prey on their financial anxieties. Even the most affluent families worry about paying for college, according to Millionaire Corner research showing that 44 percent of investors with $100,000 up to $1 million worry about financing their children’s education, and 36 percent worry about paying for their grandchildren’s college costs.

 Services offering scholarship searches and financial aid advice commonly advertise to families facing escalating college cost. Many charge rates exceeding $1,000 for help that can be found elsewhere for free, the education department said.

 “Charging a lot for a service isn’t illegal,” said the department in an advisory on scholarship scams. “What makes some of these companies fraudsters is that they collect money to find scholarships for students, but never provide the information, or they misrepresent themselves as a government agency in order to appear legitimate and attract customers, or they guarantee they’ll get the student full funding for college (and then don’t).”

 College financial aid fraud has become common enough that Congress passed the College Scholarship Fraud Prevention Act in 2000. Among other things, the act requires the education department and Federal Trade Commission to campaign for greater awareness and to make an annual report to Congress on their progress in eliminating scholarship fraud. Last week, the commission told Congress the nature of the fraud has shifted in recent years. The agency noted an increase in complaints about services that had promised to maximize a student’s eligibility for aid. Complaints about bogus scholarship and grant opportunities also appear to be on the increase.
 

Some websites offer families help filing a federal form known as the Free Application for Student Aid, or FAFSA, in exchange for a fee, but supplying information contained in the FAFSA can put a family at risk for identity theft. “These sites are not affiliated with or endorsed by the U.S. Department of Education. We urge you not to pay these sites for assistance that is provided free elsewhere,” the education department said.  

Free college financial aid information is available from high school counselors and college financial aid administrators, as well as the Department of Education. The federal agency produces a brochure called “Save Your Money, Save Your Identity” and a Web page called “Looking for Student Aid” at www.studentaid.ed.gov/LSA. The FAFSA can be filed free of charge at http://www.fafsa.ed.gov/.

The Department of Education warns students and parents to be way of services that use pressure tactics, such as “buy now or miss this opportunity,” or offer guarantees that a student will get aid. Other services will promise aid and request a bank account or credit card number, but the department warns “never give out a credit card or bank account number unless you know the organization you are giving it to is legitimate.”

Some services advise that “millions of dollars in aid go unclaimed each year,” but this number usually refers to benefits available through an employer or association, such as a union. “You don’t need to pay someone to help you find our whether your parent’s company or association offers financial aid!’ says the department.

 Families considering a private financial aid service should do their homework, says the department, which recommends the following steps:

  • Check the reputation of the company by contacting the Better Business Bureau, school guidance counselor, or state attorney general’s office.
  • Ask for names of three or four local families who have used its services recently.
  • Ask how many students have used the service and how many received aid as a result.
  • Ask about the service’s refund policy and get all information in writing.