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Scholarship firms draw criticism

Counselors say that the companies often charge for lists and leads that students could get in school for free.


© St. Petersburg Times, published March 26, 2000

As a single mom with three daughters to put through college, Delores Baker was thrilled when her oldest daughter got a letter from a company offering to help find scholarships and financial aid for her.

Ms. Baker paid the company more than $700. By the time her daughter graduated from St. Petersburg High School, she was headed for Florida A&M University with scholarships and financial aid in hand -- just as she had hoped.

The problem is that her daughter secured all the financial help on her own.

"They did absolutely nothing for us," Ms. Baker said. "We paid them $700-something, and they said, "You don't have to do a thing.' Well, they didn't help us at all."

Every year, high school guidance counselors warn students and their parents to be wary of companies that offer to get scholarships or financial aid for a college-bound student. And every year, the companies aggressively seek out the students with unsolicited mailings sent to their homes. Sometimes they help; sometimes they don't.

The problem, guidance counselors say, is not that the companies are doing anything illegal. After all, they are providing a service. When things go well, they help parents negotiate their way through a confusing morass of obscure scholarships and complex financial aid forms.

But oftentimes they provide lists and leads that students could gather on their own or with help from a guidance counselor -- for free.

"I won't call it a scam, but it's a bad situation," said Jane Howell, a specialist in the financial aid office of the Pinellas County schools. "People are worried about how they're going to pay for college. Parents are in a very vulnerable state.

"But we don't want students spending money to do something they could do for free."

The financial aid/college scholarship companies often walk a fine line between aggressive marketing and misleading tactics. This year, students received letters at home urging them to attend an interview and suggesting they could get 100 percent of their college costs covered. This time, letters went out during the summer -- before guidance counselors issued their warnings.

One letter states in bold print: "It is extremely important that you begin this process now by attending the interview." Then the letter states that "there is NO COST for the educational instruction or student interview."

"They say there is no cost, but you pay hundreds of dollars for the service," said Penny Miller, guidance counselor at Northeast High School. Though many students and families misinterpret it, the NO COST claim only refers to the initial interview.

"They make it sound very appealing," said Vivian Fiallo, a guidance resource specialist at Hillsborough High School in Tampa. "I just tell kids, "If it turns out you have to spend money, you don't want to do it.' "

One company that mailed out letters to Tampa Bay area high school students this year, College Resource Management, acknowledged that while there is no cost for the initial interview, there is a charge for the service.

"We share our fee structure only with those families who feel they need our services," Michael A. Tummillo, director of client relations for the Texas-based College Resource Management, wrote in a faxed statement.

Tummillo said that while guidance counselors do much to help students, they can't do it all because they are busy helping so many. Tummillo added his company gathers information on each student to try to help them find the right college, the right area of study and a financial aid package that will make it all possible.

Still, some believe the company could be more forthcoming.

Last year, the Florida Attorney General's Office in Fort Lauderdale investigated College Resource Management. The result was a settlement agreement in November in which the company agreed not to use high-pressure tactics and to make it clear that the service costs money. The company denied any wrongdoing, but agreed to pay the Attorney General $10,000 to cover the costs of the investigation.

"We felt they could be a lot more straightforward with their clients," said Jody Collins, assistant attorney general, who works out of the Fort Lauderdale office.

Collins said her office often works out agreements rather than filing charges in court because the agreements frequently accomplish more, and because often there is no clear violation of the law.

One question that remains unanswered is how the companies target college-bound high school students. School officials and parents are concerned because they don't know how the companies get students' names and addresses.

Pinellas County and Miami-Dade school officials researched that question, looking at several school district lists to see if it was possible the companies got their information from them. Pinellas officials became convinced the companies got the lists elsewhere because some of the information does not match up with the school district's information.

Tummillo of College Resource Management said simply that his company purchases a mailing list "from a professional mailing list company."

Regardless of how they locate their potential clients, the companies do an impressive job of finding them right at the time when students are thinking about college and how to pay for it.

"We see variations on this theme every year," said Miller of Northeast High. "Now they're targeting 10th-graders. That's a new twist.

"We just tell them, "If you get any of these letters, slow down, let's look at it before you spend your money.' "

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