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.
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1 Important Disclosures for College Ave.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, 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 7/1/2020. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.
2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
3 Important Disclosures for Discover.
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
4 Important Disclosures for Earnest.
5 Important Disclosures for SoFi.
UNDERGRADUATE LOANS: Fixed rates from 4.23% to 11.76% annual percentage rate (“APR”) (with autopay), variable rates from 1.90% to 11.66% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 11.83% APR (with autopay), variable rates from 1.80% to 11.73% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.11% to 11.81% APR (with autopay), variable rates from 1.78% to 11.72% APR (with autopay). PARENT LOANS: Fixed rates from 4.23% to 11.26% APR (with autopay), variable rates from 1.90% to 11.16% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 07/10/2020. Enrolling in autopay is not required to receive a loan from SoFi. SoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org).
6 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 applicant’s ability to supply the necessary information for submission.
7 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).