Financial Aid Company Illegally Bills Students, Refunds $5.2 Million
Financial aid companies forced to pay back families millions.
By Kathryn Knight Randolph
July 27, 2015
We’ve said it before, and we’ll say it again: the FAFSA is a daunting, confusing form for families to fill out each year in order to qualify for financial aid. However, it’s completely necessary for those seeking help to pay for college. It’s no wonder, then, that some students and their families opt to pay for services that will help them fill out the form.
While it’s completely free to fill out the FAFSA on your own, financial aid companies can fill out the form for you for a fee. But some students and their families recently found out the hard way that these companies can’t always be trusted.
Student Financial Aid Services allegedly withdrew money from customers’ accounts without their consent, according to The Washington Post. Using the domain name fafsa.com, Student Financial Aid Services charges students an initial fee of $79.99, but this last year, users were encouraged to upgrade their service at no additional cost. Unbeknownst to them, though, The Washington Post says that Student Financial Aid Services was signing them up for an additional recurring annual fee of anywhere from $67 to $85.
Though Student Financial Aid Services is denying the allegations, they are following through on the order from the Consumer Financial Protection Bureau to pay back affected students and their families, according to MarketWatch. An estimated 100,000 customers were affected and will be reimbursed from the $5.2 million the CFPB is requiring the financial aid company to pay as part of the settlement. The Washington Post reports that the CFPB is only requiring Student Financial Aid Services to pay them $1 so that all of the money can go back in the pockets of students and their families.
Despite agreeing to pay $5.2 million to consumers, Student Financial Aid Services denies that they did anything wrong or illegal, as stated by MarketWatch.
While paying other companies to complete the FAFSA is each family’s prerogative, they should always keep in mind that filing the FAFSA through fafsa.ed.gov is free. Students can also find free help in completing the FAFSA through a variety of one-day workshops held across the country. These are often referred to as College Goal Sunday or FAFSA Day and can be found within most communities. Usually, this free FAFSA workshop takes place on a weekend in February or very early March, before a majority of state FAFSA deadlines.
Finally, always read the fine print when dealing with financial aid companies. In the case above, students were signing up for recurring fees without their knowledge or consent, but some financial aid companies might sneak in (legally) some kind of fee or recurring charge that they aren’t as up-front about as the initial cost.
Use your best judgment when filing the FAFSA and remember that you can always find expert financial aid and FAFSA advice here on Fastweb.
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