It’s called the Free Application for Federal Student Aid for a reason. Submitting it – for grants, student loans, or work-study programs – doesn’t cost a thing. Of course, that doesn’t stop people from trying to make an easy buck off it, offering to submit the application for students and their families for a fee.
Don’t fall for it. It is not only an unnecessary expense, it could be a FAFSA scam.
Why you shouldn’t pay a FAFSA fee
While it is not illegal for someone to charge you for something that’s free somewhere else, it is completely unnecessary to pay someone a FAFSA fee to submit the application for you. Plus, there are FAFSA scams out there that will rip you off.
Consider two actions the Consumer Financial Protection Bureau (CFPB) took against scammers last year.
Watch out for these FAFSA scams
In July 2015 the CFPB took action against Student Financial Aid Services, Inc. and its operation of FAFSA.com. For obvious reasons, visitors to the website assumed it was the right place to be.
Unfortunately, FAFSA.com was home to scammers who allegedly:
- Led consumers to believe its fee-based FAFSA help included service plan upgrades at no additional cost beyond the initial FAFSA fee.
- Charged consumers $67 to $85 for FAFSA help without consent.
- Didn’t tell consumers these would be recurring subscription charges that would be made to their accounts every year.
In October 2015, the CFPB took action against alleged financial aid scammer Armond Aria and his company, Global Financial Support, which operated under the equally misleading names, College Financial Advisory and Student Financial Resource Center.
The CFPB says Armond and his companies:
- Used marketing materials with logos and seals that suggested government affiliation.
- Included in these marketing materials the name of the student’s college, suggesting the school’s endorsement.
- Used fake deadlines to create a false sense of urgency.
- Charged consumers fees of $59 to $78 for financial aid assistance they never provided
In both complaints, the CFPB requested the companies be ordered to cease these unlawful practices and pay restitution to affected consumers. And FAFSA.com has been transferred to the U.S. Department of Education.
How to spot FAFSA scams
Suggested affiliation with the government: The U.S. Department of Education does not endorse any fee-based financial assistance. The only resources they want you using are the free ones available at FAFSA.ed.gov
Suggested affiliation with your school: If you want FAFSA help from your school, contact the admissions office directly and not through any company offering assistance.
False sense of urgency: Find out the FAFSA deadline in your state.
Insistence the FAFSA can only be submitted through them: In fact, anyone can submit the FAFSA, including you, for free.
Think you’ve been scammed?
Report it immediately. The U.S. Department of Education recommends submitting complaints to both the Federal Trade Commission and the CFPB.
How to submit a FAFSA
First, go to FAFSA.ed.gov
That is the only place you need to go to fill out and submit the Free Application for Federal Student Aid. Click on “Start a New FAFSA App” and you’re on your way.
There are a few key points to keep in mind:
1. When you start your FAFSA application, you will be asked to enter either your FSA ID or student’s information. Choose the FSA ID option, as this will enable you to login to your account without having to provide personally identifiable information every time.
2. Find out your FAFSA deadline, which varies in each state.
3. Get started early, as the FAFSA questions require thorough answers. The last thing you want to do is rush through it.
4. Note two important changes to the application process, starting with the 2017-18 FAFSA. That’s when applicants will use tax documents two years prior to the academic year for which they are applying (previously one year). Also, starting with the 2017-18 FAFSA, you can submit the application earlier – October 1 of the year prior (previously January 1 of the year for which applications are applying).
5. Do not include student income in family income, a common mistake in FAFSA applications.
6. Just because you finish the FAFSA doesn’t mean you’re done with the process. Your school will likely request that you fill out supplemental forms.
7. If you think you’re going to miss the FAFSA deadline, contact the school and see about the possibility of an extension.
8. Don’t settle for your first offer. You may be able to negotiate a better financial aid package.
9. Do not assume you or your family make too much money to qualify for federal student aid. You never know what you could qualify for, which is why the U.S. Department of Education recommends that every college-bound student fill out the FAFSA.
Beyond FAFSA scams
If you find yourself struggling with student loan debt after graduation, beware of debt relief companies. While there are legitimate ones out there, there are plenty of scammers too. Here’s how to spot the shady ones.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or Nationwide Bank, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Information advertised valid as of 11/1/2018. Variable interest rates may increase after consummation.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB). Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. Loan products may not be available in certain jurisdictions, and certain restrictions, limitations; and terms and conditions may apply. Ascent is a federally registered trademark of Turnstile Capital Management (TCM) and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.94% – 12.78%1||Undergraduate, Graduate, and Parents|
|4.06% – 13.06%3||Undergraduate and Graduate|
|4.34% – 12.99%2||Undergraduate and Graduate|
|4.25% – 11.10%*,4||Undergraduate and Graduate|
|5.03% – 11.23%5||Undergraduate and Graduate|
|4.12% – 13.13%6||Undergraduate and Graduate|
|5.62% – 10.01%7||Undergraduate and Graduate|
|3.93% – 9.81%8||Undergraduate, Graduate, and Parents|
|4.26% – 12.13%9||Undergraduate, Graduate, and Parents|