Road to financial aid is littered with scam artists

Hosting extravagant dinner parties at plush locales, so-called financial aid consultants try to persuade parents to spend hundreds for advice on financial aid, loans, and scholarships.

They give high-powered sales pitches to families hoping to cut huge college bills: "You can't get this information anywhere else." "Things always get lost in the financial aid department." "Don't lose the financial aid you're entitled to."

But too often, according to the federal Bureau of Consumer Protection and college financial aid officers, such companies make promises they cannot keep, such as guaranteeing scholarship money or bigger financial aid packages. Other times, they claim to offer insider knowledge on information anyone can find on the Internet. Such firms are not just selling bad advice, they are committing fraud.

"If something sounds too good to be true, it probably is," said Robin Spector, a senior attorney with the Bureau of Consumer Protection, which has brought suits against fraudulent financial aid consultants in recent years. "There's nothing illegal about charging a service fee for information [people] can obtain on their own. It becomes a problem when they cross the line and misrepresent the services they are going to provide."

Families applying for financial aid are hit with an abundance of paperwork asking for all sorts of personal and financial information, industry specialists say. For some, the convenience of paying a private company to help fill out forms quickly and without mistakes may be worth a nominal fee.

"The Free Application for Financial Student Aid form is eight pages long, has 146 items, and three worksheets. For parents and students, they can find it a bit overwhelming," said Michael Alexander, a former college financial aid director. His California-based company, Student Financial Aid Services, charges families $79.99 for help with the form.

But families should not rely on private companies for help because they can get free assistance from numerous sources, government officials and college financial aid officers stress.

The places or people families can turn to for free advice include high school guidance counselors and college financial aid officers, the Massachusetts Association of Student Financial Aid Administrators and other groups that frequently host informational sessions at local high schools, the US Department of Education, which has a toll-free number and informative website; and your local library.

"If you're told you have to pay for help to get money for college, say bye-bye," said Ann Playe, a loan officer with USA Funds Services and former financial aid officer at Smith College. But some financial aid consultants, at seminars and through mailings, try to convince parents that college financial aid officers are too busy to deal with them, or, worse, are out to shortchange them.Some firms adopt official-sounding names -- such as the College Assistance Program or the National Scholarship Foundation -- with Washington, D.C., mailing addresses, or use Internet addresses similar to those of government websites. For instance, the Free Application for Financial Student Aid is available at the US Department of Education website, which is www.fafsa.ed.gov. But log on to www.fafsa.com or www.fasfa.com, and you'll find websites for private firms offering fee-based financial aid services. (One of the addresses is owned by Alexander, who says he purchased it before the government posted its website.)

Consultants make their most convincing pitches in seminars, college financial aid professionals said.

Four years ago, when her daughter Lindsay was a senior at Newton Country Day School, Katherine Nolan received a letter inviting her to a free dinner and financial aid seminar at the Chateau Restaurant in Waltham. Nolan, an assistant dean at Boston University and a former financial aid officer, smelled a scam but attended the seminar to see what services the company was offering.

She and 40 or so parents were treated to a nice dinner, wine included. After chatting with the crowd for about an hour, three or four company representatives, in business attire, dove into their pitch.

"They were overwhelming them with so much information, even I had a hard time following what they really meant sometimes," said Nolan, who could not recall the company's name. "It was sickening."

She and others suggest several tips to avoid falling prey to financial aid scams, such as getting money-back guarantees in writing.

Spector suggests following a simple rule: "If you're unsure, you can always walk away."