Financial Aid Consultants: Working For or Against Proper Distribution of Aid?
By David Sheridan
Assistant Vice President for Student Services
Stevens Institute of Technology (NJ)
It's certainly no secret that college costs are on the rise. An inevitable
byproduct is that the financial aid budgets of most colleges, not to mention
the allocation of increasingly scarce funds from taxpayer-supported aid programs,
are being stretched to their limits. The assistance that students need seems
to be getting harder to come by at a time when it's needed the most. On top
of all of that, completing the Free Application for Federal Student Aid (FAFSA)
to be considered for aid is sometimes compared--unfavorably--to filing your taxes.
Many students and families, already feeling the stress of getting into the "right"
college, then worried sick about how to pay for it, have reached the conclusion
that they need all the help they can get to gain an advantage in this daunting
process.
Enter the "financial aid consultant," a service provider who, for
a fee, will assist families with applications, instruct them on the basics of
financial aid and paying for college, offer advice on how to potentially increase
aid eligibility, conduct scholarship searches, and may even intercede on the
student's behalf in communications with the college's Financial Aid Office.
These consultants will charge a family anywhere from a few hundred to a thousand
dollars or more, depending on the level and amount of services provided. But
is this a sound investment for a family that already considers itself in need
of resources to help pay for college? Are there ethical and even legal issues
involved? And what impact might there be on a college if consultants are assisting
many of its families?
Application forms for anything can be cumbersome, confusing, and time-consuming.
Many people pay H&R Block a fee to wade through IRS regulations and formulae
each year rather than doing so themselves, and without a second thought. They
pay people to mow their lawn, clean their gutters, and change their oil. So,
they figure, why not pay someone to complete the FAFSA for them?
Remember, though, the first "F" in "FAFSA" stands for "free."
There is no charge from the source (the Federal Government) to process this
form, and there are professionals at colleges and high schools who can offer
assistance at no cost to anyone who needs it. Yet many consultants-both those
who work face-to-face and the growing number of online FAFSA completion services-try
to make the family believe that their assistance will streamline the procedure,
even though the form collects data that only the family can provide. After attending
their high school's annual Financial Aid Night presentation, chances are that
all but the most data-challenged parents will be able to complete the FAFSA
themselves, and they'll be able to do so accurately. Despite horror stories
about applicant blunders that consultants use to heighten anxiety among potential
clients, errors are not fatal, and they do get fixed.
Another common consultant service is the scholarship search. When I speak at
a high school and give my warning to avoid "guaranteed scholarship"
junk mail, the response is usually a room full of rolled eyes and moans of familiarity.
The way it works is simple: For a fee, the consultant collects basic demographic
and educational information about the student and in return sends a list of
scholarship possibilities with a guarantee that at least one will pay off. In
a best case scenario, this service consists of the consultant performing an
online search that anyone with Web access can do for free without much effort.
In a worst case scenario, no one sees any list of promising scholarship opportunities
and some thief has the family's money, a credit card number, and perhaps even
the student's Social Security number. Many of these practitioners have been
found guilty of mail fraud.
A familiar part of a consultant's sales pitch is that they will teach the family
"tricks" that increase aid eligibility. This typically consists of
advice to maneuver and manipulate their assets so as to reduce the Expected
Family Contribution, the end result of the formula into which the FAFSA data
is plugged. Despite the consultant's claims, this frequently d'es nothing to
increase eligibility, as the family's income has more impact on their aid anyway.
And if the student is academically gifted or has a good jump shot, there might
be a scholarship waiting that has nothing to do with the family's financial
circumstances. Most clients of consultants get the same aid that they would
have received if they had saved their money and applied by themselves, but they
are often led to believe that the aid package was only thanks to the consultation.
And even if the ploy really is successful and a family repositions a portion
of their assets in order to qualify for more aid, what d'es that do to the student
who can afford neither college nor a consultant? Every source of aid money is
ultimately finite, and any commitment to economic diversity on a campus is endangered
if the money is going to students who don't need it. The happy 6-figure-income
client of a shrewd consultant appreciates the chance to reduce the tuition bill
and keep the winter vacation in the Caribbean, but might be preventing another
student from getting enough aid by doing so.
These practices have become serious enough concerns that the Federal Trade
Commission and the Departments of Justice and Education have been issuing reports
to Congress as a follow up to the College Scholarship Fraud Prevention Act of
2000. These reports regularly include complaints, some of which have resulted
in convictions of not only consultants, but in some cases, their clients as
well. Actual illegal activity may be fairly rare, but the FTC also warns consumers
about paying money for services that are most likely unnecessary. The May 2005
report to Congress stated that "these operators provide few, if any, services
to help students and their families find financial aid."
What can schools do? Consultants prey on families' anxieties about college
costs and the confusing world of financial aid. We can alleviate much of that
anxiety by being proactive and providing valid, useful, and timely information
and by being as transparent about policies and procedures as possible. Keep
students and families aware of their resources, both for aid and for information.
Make updating the Web site a regular procedure throughout the year, not just
the occasional fix of a bad link or updating information that changes annually.
Consultants are using savvy marketing and technology to reach your students.
Colleges and universities should demonstrate an ethical commitment to getting
aid to the families who need and deserve it, not those who are "beating
the system." Make sure your school's need-based aid d'esn't become greed-based
aid.
