Dear Friend & Concerned Parent,
This month, we're going to delve into the "dark side" of the college funding industry.
As with every other industry, there are solid, ethical service providers and consultants, and unfortunately there are also low-life scam artists who prey on unsuspecting, nave families who will do practically anything to send their children to the college of their choice.
Sometimes, it's hard for parents to tell the difference between the "good guys" and the "bad guys", so consider this month's newsletter a "street smart" lesson in how not to fall victim to college funding scam artists.
So, without further ado, let's discuss the 5 most common college funding fakes and
frauds and how to avoid them:
College Funding Fraud #1 - Scholarship Search Scam Companies
You've seen the ads and fliers, "Millions of dollars in private grants and scholarships go unclaimed each year - get your fair share of the money!"
There are millions of dollars in private scholarships, but they only make up 1% of all funding available. Besides, your child's chances of receiving one of these awards is about the same as you winning the lottery!
There's absolutely nothing wrong with applying to these sources as long as you understand the odds and do a thorough job applying for Federal, state, and campus-based aid.
There are many FREE scholarship searches available on the Internet, so we wouldn't pay more than $99 for a personalized search, and only pay for a search if it's being done by a reputable company who doesn't guarantee you'll receive a scholarship.
Which leads us to...
College Funding Fraud #2 - Stay Away From Companies That Guarantee Exact Amounts
Don't misunderstand what we're saying here, we think it's great when a company believes strongly enough in the value of the service they're providing that they guarantee satisfaction or service.
But, you cannot guarantee an exact amount of money from any particular school.
The final decision is up to the financial aid officer at each college and university, and each school bases its decision on where your child lies academically, the college's ability to meet "need", etc.
So, if a company guarantees you a specific amount of money, be wary of them!
Which leads us to...
College Funding Fraud #3 - Beware Of Bait And Switch Companies
Many college funding advisors are also licensed insurance agents, financial planners, investment advisors, CPA's, or tax preparers.
There is absolutely nothing wrong with this. In fact, we consider it an advantage IF the person you are dealing with is an ethical professional who lets you know this upfront and focuses on helping you get through the college funding process, first and foremost.
Unfortunately, there are some insurance agents and financial advisors who have virtually no training or expertise in college funding, but use it as "bait" to get in the door, and then sell you insurance or financial products you don't need.
So, how do you tell the difference between the good advisors and the bad ones?
Easy. The good ones will focus on college financial planning first before they discuss insurance or financial products with you.
A good college funding advisor will help you with (1) income and asset planning; (2) picking colleges you have a shot of getting money from; (3) filling out financial aid forms; and (4) negotiating the best financial aid package from each school.
Then, they will discuss insurance planning, retirement planning, money-management, etc.
If they start out talking about products with you first - stay away!
Which leads us to...
College Funding Fraud #4 - Beware Of Fly By Night Seminar Companies
These are "out of state" companies who fly in for a night or two to do a college funding seminar.
When you show up, these companies "hard sell" you to sign up for their service on the spot, and actually run your credit cards that evening. Beware of these types of companies.
There are many ethical college funding advisors who offer FREE seminars and workshops to families in their local area.
These advisors don't promise or guarantee funding for your child, and they don't hard sell you to pay them on the spot at the seminar.
They typically offer a follow-up consultation at their office or your home at which time you would pay them for their services.
By the way, there is nothing evil or wrong with college funding advisors charging a fair fee of anywhere from $495 - $995 for their time and expertise as long as they provide a legitimate service, and do all the legwork for you.
Just try to avoid the "fly by night" companies that promise you the world before they have your money, and then "fly the coup" after you give them your money!
Which leads us to...
College Funding Fraud #5 - Beware of "Freebies"
Most legitimate companies and advisors charge a fair fee for their time.
Can you imagine a doctor, lawyer, or accountant providing their services to you "on the house?"
No legitimate college funding advisors would offer you their valuable time and expertise for FREE or a very low-cost.
If they do, it means one of two things: (1) they are providing you with an inferior service that will not help you pay for your child's college education; or (2) they don't understand the "time" costs of running a consulting practice, and they will probably be out of business within a year or two.
Either way, you lose! Remember, you get what you pay for in this world.
There is absolutely nothing wrong with paying a fair fee if someone can actually help you send your child to the college of their choice without spending your life savings or going broke in the process.
* * *
Well, that about covers it for this month.
If you suspect you're dealing with a fraudulent company, check out the National Fraud Information Center at 1-800-876-7060, or the Federal Trade Commission "Scholar Scam" by calling 1-202-382-4357.
If you would like more legitimate information on how to send your child to college without going broke in the process, you can call our office at 631-864-3688 to reserve a spot at our next FREE college funding workshop or to schedule an appointment for a FREE college funding analysis.
Or, you can call our FREE 24-hour toll-free college funding hotline at 800-799-0627 for a free recorded message to get our FREE Report "9 New Ways To Beat The High Cost Of College!"
Until next month...
Jan and Tony Esposito