Evaluating Financial Aid Consultants
Financial aid consultants help students and parents through the financial aid process by providing advice and assistance that supplements the services offered by the schools themselves. Just as some people seek out the services of a tax preparer for their income tax returns, a competent financial aid consultant can help a family navigate through the sometimes confusing financial aid application process.
Financial aid consultants may provide a variety of services, such as running scholarship searches, publishing newsletters and booklets, providing an estimate of the expected family contribution and helping you through the process of applying for financial aid, including filling out the FAFSA, PROFILE and other financial aid forms and assisting you with any appeals. Some financial aid consultants may offer strategies for maximizing your eligibility for financial aid.
If you need just a little help filling out your financial aid forms, you probably do not need the services of a financial aid consultant. Many schools and public libraries run free workshops and offer free help in filling out the financial aid forms accurately.
The Federal Student Aid Information Center provides a free hotline 1-800-4-FED-AID (1-800-433-3243 or TDD 1-800-730-8913) for questions about federal student aid, including questions about completing the Free Application for Federal Student Aid (FAFSA). This hotline is operated by the US Department of Education, so it can provide definitive answers to questions about federal student assistance programs and procedures.
Financial aid consultants often argue that the schools will not tell you how to take advantage of the loopholes in the need analysis process to maximize your eligibility for financial aid. After all, the job of a financial aid administrator is to distribute limited funds fairly, not teach you how to manipulate the flaws in the need analysis system to your advantage.
But there's no need to pay a financial aid consultant for help in maximizing eligibility for financial aid. Every legal tip they give can be found on the FinAid site for free. For more information, see Maximizing Eligibility for Financial Aid.
You should also avoid using a financial aid consultant because it will cause your FAFSA and school aid applications to be more heavily scrutinized. Paid consultants are required to sign the FAFSA, even if they don't fill out the FAFSA on your behalf. Beware of any consultant who refuses to sign the FAFSA, because that's a good sign that he or she is encouraging you to commit fraud.
Also beware of any consultant who encourages you to overestimate your income when completing the FAFSA. This will make you eligible for less aid. Unethical consultants do this so that they can provide the correct income figures on the SAR, making it appear as though they've saved the family money. They might even claim that they "negotiated" with the financial aid office to get you more aid, when all they did was supply the financial aid administrator with the correct financial information.
Be wary of any consultant who encourages you to use strategies that seem unethical to you. While it may be legit to reduce your assets by paying off your credit cards, it is completely illegal to lie about your assets. If you wouldn't feel comfortable telling the school about one of the consultant's strategies, don't use it. Remember, you can be fined and imprisoned for providing false or misleading information on the FAFSA. Financial aid administrators are very good at identifying fraud and the US Department of Education is instituting new procedures to catch fraud, including sharing information with the IRS.
Some consultants drum up business by sending letters to local parents advertising a free financial aid "seminar". The seminar is little more than a sales pitch for their services, with a few well-known facts about financial aid thrown in. It is a waste of your time. If you sign up for their services, it will also be a waste of your money.
Try calling your campus financial aid office before using a consultant. Although a financial aid administrator will rarely recommend a consultant, he or she will certainly tell you about past problems they've had with particular consultants. For example, they can tell you whether the consultant made errors on the financial aid forms or failed to submit the forms on time. They will also tell you whether the consultant acted in a professional manner, or whether the consultant gave parents unethical advice. Financial aid administrators get particularly upset about consultants who hurt the family by giving financially unsound advice.
Before deciding whether to use a financial aid consultant, ask them about their qualifications. A consultant who has worked in the financial aid office at a university, or who is a CPA (Certified Public Accountant) or CFP (Certified Financial Planner), will be more likely to be able to help you than one who has no experience as a practicing financial aid professional. The only experience some consultants have had with financial aid has come from filling out their children's financial aid forms. An inexperienced consultant may make costly mistakes.
As a general rule, unless the family is fairly destitute, a decrease in the EFC will yield an increase in eligibility for student loans and work-study, not grants. Just because a family demonstrates financial need doesn't mean that the school and government will throw grants and scholarships their way. Carefully consider whether it is worthwhile paying a fee for what in most cases amounts to increased eligibility for student loans.
Students should be aware that there is no charge to apply for federal student aid using the Free Application for Federal Student Aid (FAFSA). Although a financial aid consultant may charge you to assist you in filing an accurate FAFSA, they may not state or suggest that you must use their services to apply for federal student aid. Schools that participate in Title IV student assistance programs are also precluded for charging for need analysis determinations.
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