A few weeks ago I posted a review of Dave Ramsey’s College Planning Service. You all had mixed reviews of the product, and many people have come down hard on Dave for the product.
So, because I am not Dave, and because I do not have a cushion of millions to fall back on if a product/idea goes bust, I wanted to float an idea by you all before pursuing it any further.
Considering a FAFSA Prep Service
A coworker of mine was talking to me recently about how the lines at our local community college’s financial aid office are out the door each semester. Their office is woefully understaffed and the people who truly need help filling out a FAFSA, or answering their financial aid questions, are swamped.
Do you think these same people would pay to have help completing their FAFSA? Rather than wait in a long line in a financial aid office, would they rather go sit in a cushy chair across from a personalized advisor, and pay to have help filling out the FAFSA?
Consider this, FAFSA.com, the non-government entity run by Student Financial Aid Services, Inc. completes tens of thousands of FAFSA applications each year and they charge $79 for each application. People still pay this fee even though the FAFSA can be completed for free at www.fafsa.ed.gov.
Why do people pay this? To be fair, I know that many folks stumble across FAFSA.com and think it is the official government site, even though it clearly states it is not. SO a portion of these customers are there because of a lack of knowledge.
The rest however, have made it very clear that they are willing to pay for this professional service, and to have personalized assistance in completing their FAFSA.
In talking with a number of these folks, they view it as no different than paying someone else to complete their taxes each year. They know they could do it themselves for free, but they are too busy/confused/lazy to do it themselves.
Does it Defeat the Entire Purpose of Financial Aid?
Does a service of this kind defeat the entire purpose of financial aid? Most often, the people submitting a FAFSA application are the ones who need to qualify for need-based aid. They don’t have $79 lying around to throw away on professional FAFSA assistance.
Would it be highway robbery to provide this service at a cost to college students and their parents?
These are the questions that I am wrestling with. There are many other physical limitations to a service of this kind, but before I move any further in the planning phase of this business, I need to iron out the ethical dilemmas.
I am looking forward to hearing your thoughts!
It certainly sounds like there could be money to be made. Whether it’s good for the consumer is another question. How much extra financial aid are they getting for the $79? That answer may argue in favor of the service, it may not. I’m not sure. I doubt I would personally pay for the service of simply filling out the form.
Matt Becker recently posted..When Does it Make Sense to Shop for Insurance?
There definitely is money to be made. Demonstrating value is tricky, because it’s the Department of ED’s formula that is being used to determine eligibility for aid. So really, my hands would be ted in guaranteeing anything. It really would be more of a convenience service.
Similar to what Matt said, the key for something like this would be to demonstrate that the client would save, on average, more than you charge.
I can’t stand sites like that that take advantage of people who automatically add a .com to URLs and assume the resulting website is the right place. Like those websites that charge $20 to lead you to your site’s DMV webpage to pay your car registration, or freecreditreport.com
Edward Antrobus recently posted..Sometimes an Extended Warranty IS Worth the Money
I agree with you 100% Edward! That has been my big hangup with this service, not wanting to seem like a ripoff or a scam.
I would definitely take issue with this practice. The government FAFSA website is designed so that anybody can fill it out and I don’t think you would really be adding any value to the customer experience. I see similar practices with federal loan consolidation as well and I think it is wrong.
The trouble with providing any financial aid service is that the market is littered with people trying to make a quick buck, some more devious than others. If you want to make money in the business, I think the best way of doing it is to maintain the highest level of integrity. If something seems borderline to you, it will to many customers. Use your knowledge and experience in a way that is not at all questionable and I think you will do much better for yourself in the long run.
Michael | The Student Loan Sherpa recently posted..Quote of the Day: September 7, 2013
In all honesty it can be a useful service as the user could get more money from FAFSA than they would have on their own thus getting a return on their investment. It really depends on if they are really going to be receiving more money or not.