Time is ripe for college loan scams, FAME warns Mainers

This time, they sent a letter to the wrong person.

Marcia Weston, who has a son who’s a high school sophomore, received a “very official-looking” letter from the College Funding Group telling her that her son was eligible for college financial aid and how the group could help her get it.

“I’ve been tracking this for two years, and I finally got one,” said Weston, the manager of college financial aid counseling and outreach services for the Finance Authority of Maine, an independent state agency.

And she has been watching as parents around Maine have received similar letters for what FAME describes bluntly as “college loan scams.”

These groups may be charging exorbitant fees for services that students can get for free, according to FAME. On top of that, the groups have no influence in obtaining financial aid, though they may claim otherwise.

The letters say that the organization will help families fill out financial aid forms and already has scheduled group appointments to advise people on how to get college aid, Weston explained. But FAME, high school guidance departments, and other agencies already do that work and provide that advice for free.

According to the letter Weston received, while the initial group appointment would be free it would cost her $895 for subsequent personalized help. Typically, these groups charge $500 to $900 for specialized help.

FAME points out that the agency itself and the Maine Association of Student Financial Aid Administrators help families, at no charge, in filling out the free application for federal student aid and other required forms.

FAME already has heard of about nine organizations pitching their help to families, with misleading claims. They all come with generic names such as National Student Financial Aid, College Financial Aid Services, the College Partnership and the College Funding Group, Weston said. They tend to be based in Texas or Nevada, and the letters they send usually aren’t dated.

“This is the season,” said Greg Gollihur, director of FAME’s education division, about students trying to get financial aid and groups trying to cash in on their unfamiliarity with the application process.

The agency, which handles financial aid packages for the state and federal government, has sent letters to all high school guidance counselors warning them about the letters.

While what the firms offer can be shady, the only clearly illegal element is that most of the groups are not registered to do business in Maine. FAME has notified the attorney general, the state’s Department of Professional and Financial Regulation and the state’s Office of Consumer Credit Regulation that the groups are trying to drum up business in Maine.

FAME considers the letters and the subsequent assistance from the groups a scam because “there’s precious little value added, zero,” Gollihur said. “These outfits can’t guarantee anything.”

Since most scholarships and financial aid requests require direct application to the university one wants to attend or to the scholarship-granting organization, it is “doubly absurd to go through a third party,” he explained.

While the groups claim they have influence, most financial aid runs through the federal government and the schools directly to the student or the student’s family, he added.

To start the financial aid process, a student fills out a free form that the federal government uses to determine the amount of financial aid a student may need.

Then the student applies for financial aid at the school to which he or she has been accepted.

Charles Spies, the head of FAME, said in a press release, “It’s unfortunate to have these out-of-state companies preying upon parents … who are worried that they won’t be able to pay for their child’s education needs. We want parents and students to know that there are organizations in Maine that provide financial aid services free of charge.”