Financial Aid Consultants: Spending Money to Make Money?
I discussed the dangers of personal statement coaches on Saturday, and I'd like to address a similar topic today. I am always skeptical of any type of 'college admissions coach', and financial aid consultants strike me as even more suspicious. While other consultants offer a benefit that is rather unquantifiable (there's no specific dollar value of a 2200 SAT score or Harvard admission, for example), financial aid coaches offer money for money. On a simple analysis, if you earn more in financial aid than you pay the coach, you come out ahead. On the other hand, if you pay more than you earn, you have lost money with no other material benefit.
Thus, I am wary when I see steep fees charged for these consultants. Ivywise, a New York-based firm, in particular receives a lot of criticism for their programs. At roughly $650 an hour, I have wondered if their financial aid coaches can actually get you that much money back.
My suspicions grew when I read Ivywise's February 2008 newsletter which featured an article written by financial aid counselor Rod Bugarin, in which he says: "government loans for parents (called PLUS loans) have a relatively low interest rate (currently 6.1%)."
While this piece of information would be correct for students borrowing in the 2005-2006 aid year, PLUS loans have been fixed at 8.5% since July 1, 2006. Mr. Burgarin who presumably also charges the approximately $650/hour fee of Ivywise is relying on information almost two years old to give financial aid advice. This worries me.
In fairness, I e-mailed Mr. Burgarin last week about the error and he had this to say:
[T]hanks for letting me know. I[']ll make changes on monday. I should[']ve double checked the interest rate before publishing the article. As this article was in a two part series, I[']ll let readers know in next month[']s edition. Thank you.
Though it is now Tuesday and the error persists, I am glad to see him acknowledge the mistake and endeavor to correct it. But should I, a small, independent purveyor of free advice really be correcting the errors of a career financial aid consultant who charges hundreds of dollars per hour for his service? Ivywise's most expensive package runs for over $32,000, and patrons could potentially be paying for damaging advice. Industry experts earning salaries for their services should know better.
I do not mean to criticize any one program or company. Instead, I would like to remind students and parents that there are options available outside of high-priced consultants. Much of the advice they offer is available free at many places on the Internet, including this site. The industry of college admissions consulting is one in which more the expensive services are not necessarily better.Have any insight on this topic? Want to ask a question or make a suggestion? Click here to leave a comment.
- More on the Dangers of Personal Statement Coaching and Editing
- Don’t Worry About the Money: Why Stressing About Student Loans is Unnecessary
- What Parents Don’t Know About Financial Aid Will Hurt Them
- Could Rising Interest Rates on Student Loans Actually Be a Good Thing?
- Should you stop claiming your son or daughter as a dependent on your taxes?
- Does Using Other Acceptances as Leverage to get more Financial Aid Work?
- 10 Ways to Fail the FAFSA