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As the financial aid process has become more complex, there has been a significant increase in the number of individuals offering professional financial aid services to students and their families. Most popular among these are financial aid consultants and scholarship search companies. Some families sing the praises of certain consultants and scholarship search companies. However, the industry also includes "bad apples" who charge exorbitant fees and who do little more than provide information that is readily available for free. As a wise consumer, you should exercise caution to avoid being taken advantage of and be sure you fully understand the services that are offered. The following information should help.

Financial aid consultants offer a variety of services including:

• Preparing the Free Application for Federal Student Aid and other financial aid forms
• Estimating your resources
• Estimating your Expected Family Contribution (EFC)
• Estimating your financial need
• Describing the types of federal and state aid programs that are available

Financial aid consultants usually charge a fee for the services they provide. Before you shell out your hard-earned dollars for the services of a financial aid consultant, keep in mind this important fact: a financial aid administrator can perform these same services free of charge! Contact a local financial aid office for information or assistance. Even if you are planning to attend another school, the staff in any financial aid office should be able to provide you with the same information and assistance that a consultant would provide. The Internet is also an expanding method of obtaining student financial assistance information. In particular, the U.S. Department of Education web site provides aid information at www.ed.gov/studentaid.

If you decide to use the services of a consultant, there are a few more things to consider:

• Before hiring a consultant, request a list of references from the consultant.
• Never agree to a fee based on the percentage of aid that is received.
• Never sign a blank form.
• Always review and sign the Free Application for Federal Student Aid (FAFSA) after it has been prepared, and mail it yourself.
• As with all important documents, always keep copies of the FAFSA and other applications for your files, even if someone has assisted in their preparation.
• The consultant's fee should be refundable if the FAFSA is completed incorrectly.
• A financial aid consultant cannot guarantee financial aid.
• Certain scholarships and grants awarded by schools and outside organizations are discretionary funds that may or may not be awarded again in subsequent years, even to prior recipients.

Search services offer to find sources of student financial aid for a fee. Some of these services have been in existence for some time, others are relatively new. Search services need to be used with care and only after a thorough investigation of the services they render. The value of the information provided varies widely. A guarantee that at least a certain number of sources will be found might simply mean that the service will tell you that you can apply for the federal aid programs. There is no need to pay a search service to identify these programs, because information on the federal student aid programs and most state and institutional aid programs is readily available free of charge. A little time and effort on your part on the Internet, at your school financial aid office or high school guidance office, or in the reference section of a library will probably unearth any sources of assistance a search service could identify. The U.S. Department of Education produces an annual Student Guide, which provides information on all the federal student aid programs. Several companies have also made scholarship databases available on the Internet to students for free.

Many companies advertise through flyers, campus newspapers, direct mail, and Web home pages that they can get students access to millions of dollars in unclaimed grants and scholarships. The Federal Trade Commission (FTC) encourages you to be well-informed about these companies and provides these tips:

1. Determine whether the company is actually offering a scholarship or is simply a scholarship search service. If the company claims to actually award a scholarship, be aware that most scholarship sponsors do not charge up-front fees to apply for funding, and no legitimate scholarship sponsor can guarantee that you will win an award.
2. Understand that scholarship search services do not award scholarships. These companies charge a fee to compare your profile with a database of scholarship opportunities and provide a list of awards for which you may qualify. They do not provide awards directly to applicants, nor do they help students apply for the awards. Some will list scholarships even if the application deadlines are past.
3. Don't give out credit card or bank account numbers on the phone or on the Internet without getting information in writing first. It may be a set-up for an unauthorized withdrawal.
4. The FTC reminds you not to forget the age-old rule: If it sounds too good to be true, it probably is!

From the NASFAA Web Site www.NASFAA.org
Posted September 18, 2000