Weekend Waster - College Resource Management under investigation on fraud charges - Brief Article

Kiplinger's Personal Finance Magazine, Oct, 2001 by Kristin Davis, Courtney Mcgrath

EDUCATION | Want more FINANCIAL AID for college? Buy a book, not a sucker pitch.

WHAT PARENT of a high schooler wouldn't take notice of a letter that promises "guidance and instruction" on college admissions and financial aid, plus a personal interview with "highly trained and knowledgeable enrollment counselors"--all at no cost?

Over the past few years, a company called College Resource Management, a subsidiary of the College Bound Student Alliance, has blanketed the country with such letters, drawing thousands of parents to local hotels for weekend seminars. The two- to three-hour seminars are free because they're really high-pressure sales pitches for a $995 "action plan" for maximizing college aid. Those "highly trained counselors" are called sales representatives in the CBSA's annual report.

The Federal Trade Commission has noticed the letters, too, and in May it filed charges against the company for deceptive sales practices. Among the FTC's allegations: Despite promising personalized financial-aid and academic advice, the company's action plans restate the information that participants fill in on a questionnaire, followed by some broad, generic advice on how they can qualify for more aid, such as paying down debt or having a parent go back to college. Many of the suggested strategies "are not feasible or practical for most families," says Gregory Ashe, a staff lawyer with the FTC's Bureau of Consumer Protection.

The FTC also alleges that the company was sluggish in responding to requests for refunds, and refused refunds when customers didn't implement all the recommended strategies, even when they were unsuitable.

"I think the company gave what it promised," says Paul Lester of Fieldstone, Lester, Shear & Denberg, who is general counsel to CBSA. While the company admitted to no wrongdoing, it settled with the FTC by paying the government $40,000 and agreeing to clean up its marketing practices. For instance, the company will refrain from claiming that customers are likely to receive more financial aid than they could obtain otherwise.

A similar suit has been filed against the company by the attorney general in Minnesota, where the company has done business as College Financial Aid Services of America; it now operates nationwide as the College Partnership.

"Seminar-type outfits are on the rise," says Ashe. So if you get invited to spend part of your weekend learning how to "maximize financial aid through strategies you otherwise may never know exist," skip the hotel conference room and head for the bookstore. One of these first-rate guides to financial aid will fill you in: Don't Miss Out: The Ambitious Student's Guide to Financial Aid (Octameron Associates, $10) and Paying for College Without Going Broke (Princeton Review, $18).