Financial aid officials say free money shouldn't cost anything
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By JEAN ORTIZ / Lincoln Journal Star
It was almost 10 years ago, but Dolores Simpson-Kirkland hasn’t forgotten.
Back then her daughter, her oldest child, was a senior in high school. That was when the letter came.
She can’t remember the name of the company that sent it, but it said her daughter had won scholarships. To find out more she needed to attend a meeting at the University of Nebraska-Lincoln’s East Campus.
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Financial aid scams often have some common threads. Here’s a quick list of what to watch out for:
- No solicitors allowed -- Whether an offer comes by mail or phone, be skeptical of unsolicited offers. Do your research before getting involved, and definitely before handing over sensitive information
- Cash or credit? -- Be cautious of any fee. Free scholarship searches are readily available and the federal application for grants and loans is free -- hence its name, the Free Application for Federal Student Aid.
- Promises, promises -- No one can guarantee a grant or scholarship, let alone guarantee admission into a particular school. Though they may offer refund guarantees, look for any strings attached.
- You are special -- Be suspicious when you are “specially” selected or told you’ve won a prize and never entered a contest or sent in an application.
- One and only -- Question claims that say the information isn’t available anywhere else. It usually is available elsewhere and for free.
- Glowing testimonials and glossy photos -- Don’t automatically trust any Web site. Before responding to an organization, do some research on its track record and talk to a guidance counselor or other professional who might have background.
- Still suspicious? Contact:
- National Fraud Information Center, 800-876-7060
- Federal Trade Commission, 877-FTC-HELP
- Better Business Bureau (Lincoln office), 436-2345
- Nebraska Attorney General’s Office, 471-2682
Next week:
The business of community colleges -- With college costs on a steady increase, community colleges continue to refine their niche in the higher education market as a cost-effective alternative, even for those students who still intend to get a four-year degree.
Of course she was curious. Though Simpson-Kirkland had a college education, she hadn’t reljied on financial aid to pay for it.
This was new.
“We thought hmm, OK let’s see what this is about,” Simpson-Kirkland said.
It wasn’t until she was sitting in the packed meeting room that it began to sound a bit fishy. The company wanted money, and the meeting leaders were resorting to high-pressure sales tactics to get it.
“Once we got a sense of what was going on we got out of there,” said Simpson-Kirkland, a guidance counselor for freshmen and sophomore students at Lincoln Southwest High School who has worked in some capacity with Lincoln schools for 23 years.
That’s the happy ending.
But not all stories end that way.
At best, the schemes may be assessed as unscrupulous business practices. At worst they are outright rackets, say those with ties to the college financial aid process who can count up students and parents who learned the hard way.
“We hear sad stories every year of people who get taken advantage of,” said Craig Munier, director of scholarships and financial aid at UNL.
That includes the stories of companies coming through town, popping up at hotels, sometimes renting out a room on a college campus only for school officials to discover their plans later.
The companies get names and addresses through public records or even buy information through teen magazine subscriptions.
Often, they go to extraordinary lengths to appear something they’re not, Munier said. They don’t stop at misrepresenting an affiliation with a university; some try to give the vague appearance they are the federal government.
If not a seminar, it may be an unsolicited phone call or mailing packed with claims and promises. Some offer scholarship searches for a fee while others cut to the punch, asking for personal information like credit card and bank account numbers.
Students and parents need to employ some healthy skepticism in dealing with the offers, said Les Monroe, director of college planning with local nonprofit EducationQuest, which works to make college more accessible in Nebraska.
What the offers often don’t disclose is that resources to understand the financial aid process are free, so long as you know where to look, he said.
Free scholarship searches, for example, are readily available including through the U.S. Department of Education or organizations like The College Board.
The fraudulent activity has the attention of federal officials. In 2000, Congress approved the College Scholarship Fraud Prevention Act. Besides establishing stricter sentencing guidelines for those found guilty of deceptive practices, it created the basis for a national campaign to draw awareness to this kind of fraud.
Though still a small portion of all fraud cases, which are also on the rise, scams specific to scholarships and grants have mounted, according to a 2006 annual report to Congress that includes data from a national fraud database.
In 1997, 182 such complaints were logged, compared with 7,283 complaints filed in 2005, the most recent data available.
The complaints also have shifted over the last decade, the Federal Trade Commission reports, from bogus scholarship search firms that rely mostly on telemarketing to consulting firms that promise custom financial planning to maximize aid eligibility.
The changes at the federal level haven’t necessarily had much of an impact, in Monroe’s opinion.
In response, companies have lowered fees to avoid penalty and instead have aimed to make up their loss in volume, he said.
Monroe said he hears of suspicious activity locally likely five to ten times a year, mostly in the summer when students are away from guidance counselors and others who might sound a warning.
The cases involving scholarships are the most challenging to stop because the scholarship search can be so daunting, he said. Some students may see the offers as an easy way out and will lighten the load in an already busy school year.
Some authorities are confident students and parents are hearing and heeding the warnings.
The Nebraska Attorney General’s Office has not received any complaints in two years about seminar scams like those attended by Simpson-Kirkland, but it has fielded questions over the phone, said spokeswoman Holley Hatt.
The Attorney General can take action if companies are illegally obtaining student information, or if the cost of the service is more than they advertised or are guaranteeing results they have no control over, she said.
The punishments vary by severity, said Hatt, who couldn’t put an average on the sentence offenders receive.
But students and parents need to be vigilant and be able to differentiate the legitimate organizations from the rest, she said.
They should take their time and not be pressured to pay anything, she said.
“They should know that solid companies don't use high pressure sales tactics,” Hatt said.
Do some research and have some skepticism about companies that change their name or move frequently, Monroe added. Be wary of unsolicited offers. Understand that refund policies aren’t necessarily what they seem on the surface.
Don’t assume an affiliation and don’t let an official-looking Web site sway you, he said.
“It’s up to the consumer to be aware,” Monroe said.
Reach Jean Ortiz at 473-7107 or jortiz@journalstar.com
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