Create a free Diverse: Issues In Higher Education account to continue reading

Education Department Cracks Down on Misleading Financial Aid Web Sites

Education Department Cracks Down on Misleading Financial Aid Web Sites

Flint, Mich.
Financial aid officers nationwide are in an uproar over an Internet Web site that they say has confused and misled many families, and charges money for a service that students can easily get for free.
All students who apply for federal financial aid must fill out a form called the FAFSA, or Free Application for Federal Student Aid. If they visit the federal government’s site <>, they can complete forms for free. But many families are ending up at <>, a for-profit company that charges for handling basic forms — $79 for first-time applicants and $49.99 for repeat customers.
The U.S. Department of Education takes issue with that Web site and says it is purposely using the “FAFSA” name to dupe unsuspecting financial aid applicants.
Education department attorneys sent a cease- and-desist letter in January to the proprietor of the because its Web address is nearly identical to the free government site.
The letter requests that proprietor Michael Alexander of El Macero, Calif., shut down the site and transfer ownership of the name to the education department’s Office of Student Financial Assistance.
We “believe that the use of domain name is calculated to, and does in fact deceive consumers,” the letter states. Furthermore, the name “may violate federal law concerning the use of names to indicate U.S. government affiliation.”
Alexander, a former director of financial aid at the University of Colorado, could not be reached for comment. A California telephone number assigned to his name was unlisted. Calls to telephone numbers listed on the Web site were not immediately returned.
According to the education department, more than two million college applicants used the government’s FAFSA Web site to apply for financial aid last year, and next year that number is expected to increase to three million. If for-profit Web sites with similar names are able to attract just a fraction of the users looking for the free government site and convince families to pay, it could prove to be quite lucrative.
“We’ve been using the FAFSA acronym since 1973,” says Karen Freeman, an education department spokeswoman. Companies are “trying to capitalize on our name.”

Not all scholarship search firms and financial “help” sites are bogus. Some have proven track records and some families might consider their services valuable.
Charging to fill out a form is not a crime, but some financial-aid experts call it deceptive.

A costly LESSON
In many states, financial officers say they have received calls from frustrated parents complaining about scholarship and aid-related Web sites they visited by mistake. At Hampton University in Virginia, director of financial aid Cassandra Costa says when families call and are considering paying for a service, she tries to steer them to official Web sites that are free.
“If a parent tells me they’ve spent $150 for someone to fill out their forms, I tell them that that money could have been used to go toward their child’s education,” Costa says. “That’s why the word “free” is in the name of the form — parents shouldn’t have to pay to have these forms filled out.”
Dallas Martin, president of the National Association of Financial Aid Administrators (NAFAA) in Washington, D.C., says Black and Hispanic students — who often come from low-income families — are particularly vulnerable to misleading Web sites.
“Many times these are first-generation students and their parents desperately want their kids to go to college,” Martin says. “But they need money, and I think that kind of makes it easier for companies to take advantage.”
Pema Schmidt, a parent in the Flint, Mich., area, learned the hard way. In October 1999, when her son was an 11th-grader at Davison High School, she received a letter inviting them to a financial-aid workshop.
She says the company charged about $700 and had her sign a contract and pay a $250 deposit. When Schmidt attended the session, company representatives “said we would need help from them to get the best financial-aid deal,” she says. “They said that there’s a key to filling out the FAFSA, and that it would cost us a lot of money if we filled it out the wrong way.”
Schmidt later grew suspicious and requested a refund. Trying to get her money back “was very exhausting, like pulling teeth,” she says. “For two weeks, none of my phone calls to the company were returned. I talked to other parents who didn’t get a penny back and lost more than $600.” All of Schmidt’s money was eventually refunded, but she regrets that she was so gullible.
Mark Delorey, president of the Michigan Student Financial Aid Association, says some companies tell parents that colleges are hiding scholarships and grant money from them. They tell them that the only way to find financial aid is to pay for it.
“That’s just not true,” Delorey says. “It’s in the college’s best interest to get aid to as many students as possible, so more students will be able to enroll.” 

© Copyright 2005 by

The trusted source for all job seekers
We have an extensive variety of listings for both academic and non-academic positions at postsecondary institutions.
Read More
The trusted source for all job seekers