Bogus College Funding Scams

There is a huge industry making money off people who are desperate for some type of college funding help.  The cost of four years of college today as of this recording is well over $100,000.  That’s to attend a public state-supported college.  If you are looking for private colleges and elite colleges you’re going to have to at least double that.  This is for the first kid.  What about the second kid… or the third?

College, by and large, is unaffordable for the middle-income family so they have to go into debt to pay for college.  Families are desperate for solutions and, of course, there are people willing to step in to make money off of people who are desperate for solutions.

Over 60% of the people calling themselves a college something: college planner, college advisor, etc., are charlatans, fake, and provide bogus services.  They are really not college funding experts.  They may know a little bit about some things and, unfortunately, because they know a little bit, that’s a lot more than most people know, so they think that the person who knows one more thing than you do is an expert. They’re willing to take your money for a little bit of information or a little bit of service but, ultimately they’re going to look to put you in debt because most of these people only have programs that are set up for you to take loans and debt to pay for college.

Legacy of Disinformation

There is a legacy of disinformation.  This is beyond MIS-information.  DIS-information is a nice way of saying they are telling you a lie because they know the information is false, but they want you to believe if for some deceptive purpose.  One of the biggest lies is that there are no scholarships.  The next big lie is that you make too much money to qualify for any type of financial aid or scholarships, and ultimately they tell you that you don’t qualify for a lot of college funding opportunities and their strategy is the only solution.  There are hundreds more.  These are the most common.

Most of these people have little knowledge or expertise themselves, yet they’re going to advise you on how to pay for college.  The problem is… you don’t know they don’t know.

Troy Onink writes in Forbes Magazine:

“Much of the information on the internet, presented at college aid nights, in print in leading financial publications and disseminated by guidance counselors and the financial industry is either wrong to begin with, misleading, or out of context.”


Let’s get a little bit of truth here.  There are about 700 colleges that offer full scholarships, all the way from Abilene Christian and American University, to Wichita State and Xavier.

Every US citizen and legal resident is entitled to some form of federal aid, regardless of income.  Any information to the contrary is incorrect and often an outright lie.  Again… it is an entitlement regardless of income.  Indeed there are academic scholarships – Merit Scholarships – that have nothing to do with income that are available at some 700 colleges, and these are not small, obscure colleges.

These range from University of Alabama where a 33 ACT can get you $100,000 in scholarships, to large regional universities like the University of Texas at Dallas where a 32 ACT can get you Full Tuition plus cash, to private colleges like Fordham University in New York City top students and National Merit Finalist can earn Full Tuition… and more!


Please note: Most of these Merit Scholarships are based on SAT and ACT scores.  Most of these charlatans have no in-house SAT or ACT preparation program.  They will send you to one of the national companies (Princeton Review, Kaplan, or Khan Academy) or tell you to buy the prep book because they’re not focused on scholarships; they are focused on you taking loans and debt, and paying them for the privilege.

Bogus Banditos

I have broken it down to six types of “Banditos,” their modus operandi, and how to identify them.  I’ll give you the list here and we will get into each one of these in detail.  We have the Anonymous Advisor, followed by the Masqueraders, not to be confused with the Masked Raiders, Mass Invaders, Loan Arrangers, and finally, Fee for Free.  Let’s get into each one of these.

Anonymous Advisors

We start with the Anonymous Advisors.  A large number of the so-called college assistance and college funding planning organizations are actually Anonymous Advisors.  You go to the website; there is no person’s name on the website.  There is no human being indicated on the website.  You generally don’t know – by name – who is running the company.  If you do, there are usually no credentials or degrees.  There is no evidence of anyone having a degree or credentials, usually because they don’t have degrees or credentials.

So I’m sitting here scratching my head.  You’re about to make one of the largest if not the largest investment of your family history and you’re depending on somebody who doesn’t even have their name or their picture, or their credentials on the website.  But again some people are so desperate for information they just skate past this and hope these people have some miracle or secret.

There are no real pictures on the website.  You can’t point to a human with a name to it.  There a just a bunch of stock photos and anonymous testimonials.  Now, I have stock photos on my website, but I also have faces of real people, with real names, and images of real scholarships, and, of course, and pictures of me.

They have a hollow sales pitch specifically focused on how they can provide information about helping you get in the college and qualifying for funding.  Most of the information is superficial because they are not college funding experts; they are experts in figuring out ways to get money out of you with the least amount of effort on their part.  They often evade specific questions.

We call them Anonymous Advisors because you may never meet them.  You may talk to them on the phone but there is really no legitimate person to contact.  There is just a voice on the phone or an email address.


The next group we call the Masqueraders.  This is a growing industry.  They use “College” as bait to get you into a workshop or a meeting usually through your school’s PTA.  They pose as “College Funding Planners” and they even may have some very superficial college planning credentials – most of which you can purchase by sending in your credit card number.

In reality, they’re trying to sell you insurance.  They lead off with things like college savings and planning, but ultimately they want to sell you some type of insurance product: an annuity or some type of savings or retirement plan.

While I’m talking about this, let me give you a little reality check.  If you have a student in high school, it is essentially a financial impossibility for you to save enough money to pay for college unless you make $200,000 or more.  It’s too late to save.  A family that has less than $200,000 in income cannot save enough money while your student is in high school pay for college… and that’s for the first kid.  What about the second kid?

There was the entire industry built on this some 25 years ago.  The insurance industry was going to a little bit of a crisis and so they had to figure out a way to sell more insurance- enter “college funding”.  They brought in a master marketer and as he analyzed the situation.  His solution was that these insurance people needed to reinvent themselves as college funding planners and use insurance instruments to save for college.

25 years ago you could do that.  A family could get into a college savings program while the student was a junior or a senior, get a Pell grant and take out a Stafford loan for college, and by the time they finished, their college savings plan made enough money to pay back the loans.  But, that was 25 years ago.  In 1993 the total cost to attend a state university tuition room and board was a little over $9,000 per year.  Today it’s almost $30,000 year, so these guys had to change their tune but didn’t change their tactics.

Most of them will offer some form of token resources such as access to all superficial test prep programs or outsource the FAFSA process.  You might even end up talking to somebody on their staff who actually went to college, but most of these people don’t have college degrees.  They may have an insurance license, but they usually didn’t go to college or know much about college prep.


I’m going to put a caveat in here, a very important caveat.  There are some legitimate college funding professionals.  There are not many of them.  They make up less than 5% of the financial industry.  A lot of people will call themselves “college funding planners” but all they did was take the securities exam and they don’t know any more about college funding planning than the man on the moon.

The people I’m talking about are professionally trained and they are usually on the high end of the profession.  Now the financial planning will usually include insurance to make sure that there’s enough money to pay for college in case something happens to you, but they are not baiting with “college.”  You need to make sure that these people have the credentials, they have the training, and they have the certifications most Masqueraders don’t.

Masked Raiders

Next are the Masked Raiders.  These are the real “Banditos” of the scam business.  They mess with your investments.  They try to shift your portfolio around to hide your assets so that you might qualify for more need-based aid.  Reorganizing your portfolio is not wrong.  I give advice on this, too.  It is this next item is what makes them the “Banditos.”

Their main strategy is to get into your home equity by refinancing your home and taking that equity and putting it in a whole life or universal life insurance policy, which by the way, does not appear on your FAFSA or any other financial aid forms.  Then they have you borrow against your insurance policy to pay for college… to pay RETAIL for college.

You see testimonials on their page where parents say “I just raised my mortgage payment only $400 for my kid to go to Purdue.”  Well, you get the pay that extra $400 for another 30 years!  So what you have just done is that you get the buy your house again at a higher price.  Plus you owe your insurance policy the loan that you took out.  Plus you paid retail for college.

Now that’s not a deal but some people see it as a deal and it’s not.  College has now cost you twice what you paid because you have to rebuy your house and you have to pay back the loan.  The way it’s presented to them it sounds reasonable.  An extra $400 a month but then it’s an extra $500 a month for the next kid and an extra $600 a month for the third kid.  You probably only have one house to refinance, so this is often a one-shot deal.

I firmly believe that these guys are crooks.

By the way, one of the biggest companies in the country that does this has franchises all over the country.  Neither the president nor the vice president of the company have college degrees.  Most of the franchisees do not have college degrees.  All they know to do is to get you to refinance your house, buy insurance, and borrow against the insurance pay for college.

They will charge you $3000 – $4000 for the privilege of putting you into double debt.  They’re going to make money on the commission for the mortgage.  They’re going to make a huge commission when you put that equity lump sum into an insurance policy.  Depending on the amount put down, these people are going to make $10,000, $15,000, $20,000 in commission.

They make a lot of money doing this.  They really don’t care about you; they just care about making a lot of money off of you with this double debt trick.  As far as I’m concerned, they are crooks.  But they’re out there and technically this is not illegal.  All they need is a simple insurance sales license to do this.  No degree; no college knowledge.

They use insurance as the “fence” for college.  A “fence” is someone who buys stolen goods.  They use insurance as the “fence” to refinance the house, pull out the equity, buy insurance, and borrow against it to pay for college; pay RETAIL.  Instead of college loans, the debt is simply transferred from the college to your home, which you now have to buy again, and you still have that insurance policy you borrowed against to pay off.

Mass Invaders

Next are the Mass Invaders.  You may have encountered some of these.  Generally, they do a mass mail out inviting your kid to this special meeting about college funding.  They say that there is limited seating and you need to call or go online for registration.  They usually rent a hotel ballroom where they assemble crowds of desperate students.

These students have dreams that somehow there is going to be a miracle performed in this meeting that is going to help them pay for college.  I’ve seen him outside of these ballrooms all lined up thinking that this is a solution for college.  I’ve gone down the line asking these kids what they expect to get out of this meeting.  Do they think they’re going to give you checks and give you money on the way out?  And a lot of them said yes; they expected to be able to go to this meeting and walk out with all the college paid for.

They get these vulnerable, desperate kids in this meeting and they do a very high-pressure thing on the parents, asking if you are going to sacrifice the education of your child for what they are charging for this program.  They set things up with monthly fees charged to your credit card.  They provide a token program.  You’ve heard this term a lot – token.  Very superficial shallow programs on test prep, applications and scholarships and things that most people can get on the Internet for free with a Google search.

They prey on the dreams and desperation of these kids.  They fill parents full of guilt and manipulate the dreams of these kids and they pay money to these Mass Invaders only to end up taking out loans for college.

Loan Arrangers

Next are the “Loan Arrangers.”  These guys simply set you up to take out federal and state loans – something the college financial aid office will do for you anyways.  They don’t talk scholarships because they themselves don’t know that there are scholarships.  They usually open with “There are no scholarships.”

The first thing they want to do is look at your W-2 and 1040 so they see how much money you make so they can figure out how much money they can make off you.  They don’t look at SAT/ACT/GPA: you know… those things that are important for college.  They’re looking at how much money mommy and daddy make and how much of that they can get.

These people don’t do scholarships.  Indeed, they don’t do anything other than help you fill out the FAFSA so you can take out loans.  They don’t help you with admissions, they don’t help you with selection; they just fill out the paperwork for you take out loans.

Now we do a lot of FAFSA help for people because 80% do it incorrectly – losing thousands of dollars of aid.  Indeed I had one parent who didn’t fill it out properly.  I redid it for him and it was a differential of $20,000 in financial aid, but let’s move on.

Most of these people don’t have degrees.  In fact, a lot of car salesmen are moving over to this because it is an easier gig.  Like a car salesman, all these people do is set you up to take out loans.  Car loan… College loan… same gig, less hassle, they get paid upfront, and no liability on the car.

Horror Story

Let’s get our horror story here.  I had an office in a very large office complex.  We used the boardroom to meet with clients.  There were three other Loan Arrangers who had offices in that same building, in fact, two of them had their offices on the same floor as my office.  There was a parent who had an appointment with one of these Loan Arrangers one evening who accidentally walked into my meeting with my clients in the lobby boardroom as I’m talking about college.  So he’s assuming that this is the meeting he supposed to be at, so he comes in and he sits down.

The Loan Arranger is looking for him in the lobby, sees him in my meeting, comes into my meeting, and takes him back to his office.  The Loan Arranger explains to the dad that they’re going to have to take out loans and that there are no scholarships.  The Loan Arranger turns his daughter and says, “Your parents really care about you because they’re willing to take out loans for your education.”

Nobody ever looked at this student’s GPA, test scores, class rank, or anything academic because the whole concept of getting a scholarship was totally foreign to these Loan Arrangers.  Scholarships weren’t even on their radar.

So after meeting with the Loan Arranger, the father comes back to the boardroom as we are finishing up and talks to us.  We find out his daughter has grades and scores good enough scores to qualify for scholarships.  It was very difficult for him to believe that after being in indoctrinated by these are these Loan Arrangers.

Good Ending

The story did have a good ending.  Based on her GPA and test scores, she qualified for a full scholarship at the University of Alabama.  Yes, that Alabama Crimson Tide and all that kind of stuff.  She ended up going to the University of Texas at Dallas where she got a full scholarship that handled tuition and fees plus she got $6000 cash each year.

These folks went from visiting a Lone Ranger and being set up to take out quite possibly $80,000 – $100,000 of loans to not having to pay anything for college at all, and no debt, PLUS cash.  She probably could have gotten several other full scholarship offers but her family lived in Dallas area and she wanted to stay close to home.  She got a full scholarship plus money.

Fee for Free

There are these people who do Fee for Free.  They actually sell information that is otherwise free and easily available on the Internet or some other source.  They repackage the free information with their letterhead and sell it as their own.

One of the biggest Fee for Free gambits was the Discover scheme.  This happened several years ago and the people who do the Discover program figured since then how to keep them from doing it.  This program is called Discover and ACT uses it to help people determine majors and career fields.

Several years ago there was a bunch of these Fee for Free crooks who would sell this program saying we can help your student determine their major and career field.  At that time this instrument was free on the ACT site.  What they did was capitalize on the ignorance of these people, again, people desperate for information; parents desperate for information help their students.  They knew that less than 5% of the people actually go through the website, so they don’t know that these things are available for free.  In fact, most of the people only go to the website to register for the test.

These Fee for Free people developed their own questionnaire that used the same questions that was in the Discover program.  They would have the student fill out the questionnaire and then they would go to the ACT site, register under a bogus name, and punch in the data that they got off of their questionnaire.

Then the ACT program would produce the data for the student.  They would take that data, transcribe it to their letterhead, and give it to the student and the parents is this great grandiose career and college major assessment in a fancy folder.  And they would charge parents $1000 to do this.  There are people who I met in California who are doing this full time making $25,000 to $30,000 a month repackaging and selling free information.  They had no qualms about it.  They didn’t think it was wrong.

There are so many people out there willing to take advantage of parents who don’t know.  They capitalize on other people’s ignorance.  60% of the people who call themselves some sort of college advisor or college planner are charlatans – fake, bogus, and “Banditos.”  College is expensive and parents are desperate, so the first place they hear some may say anything about college, they jump on it thinking that this is the quick and easy solution.

“Scholarship” List

A lot of these Fee for Free people have a “scholarship” list.  This has been going on for the last 30 years – pulling free lists found online and transcribing them on new letterhead.

All scholarship information is available online.  There is no secret list.  There is also no single list with all the scholarships, so compiling a legitimate list is daunting and time-consuming.

It does take a lot of work to compile these lists, so I have no problem paying someone or getting paid to compile a custom list.  I do customized lists all the time if a client needs it.  Most don’t.

However, these Fee for Free people provide a token list – not much content, but people are desperate, so they’ll take anything without much thought.

I have an institutional scholarship list I give away.  You saw it earlier in the presentation.


Most of these people will offer a token FAFSA service where they will charge you $1000 to fill out your FAFSA.  In reality, they don’t know anything about the FAFSA.  They have some contractor they pay $300 to do your FAFSA and a keep the $700 balance.  And they are out there.

A caveat here:  Some FAFSAs are very complex and require professional level intervention and advice (and cost more).  We have corrected FAFSAs that resulted in a $20,000 increase in financial aid.  You won’t get this from a person who does a $300 FAFSA or the people who charged you $1000 to get a $300 FAFSA.

Bogus Banditos

Let’s review the six types of so-called college helpers are out there to take your money for the privilege of taking your money.

Anonymous Advisor


Masked Raiders

Mass Invaders

Loan Arrangers

Fee for Free

College Criteria

Here’s a list of criteria you need to use to determine whether or not the person you’re talking to is one of the 60% of those in one of our six categories

Human Face w/Degree on Website

Make sure there is Human Face w/Degree on Website.  Most people who do this do not have their face or their degree or credentials on the website because by and large they don’t have a degree or credentials and they don’t post their name because they don’t want you to Google them and figure out who they are.  Most of them are anonymous.  You may have an email and telephone number but they do not have a human being with degree and credentials and picture on the website.

SAT/ACT/GPA instead of AGI, W-2, 1040

SAT/ACT/GPA instead of AGI, W-2, 1040: they should be asking for your SAT, ACT, and GPA instead of your AGI, W-2, and 1040.

If they have a human face with a degree in the website and they ask for the academic credentials, you can check that off and proceed.  However, you may be able to eliminate the vast majority of the six types of bogus college people with just these two questions.  If they don’t pass these two, you need to walk.

History of Scholarships

They should be able to produce a history of helping students get scholarships.  Indeed they should open the discussion with the potential of pursuing scholarships if the student is qualified.  The discussion should focus on the qualifications for scholarships in which a student needs to do qualify.  Merit scholarships are awarded based on merit, not income.  Merit scholarships are awarded regardless of income.

Ask for examples of scholarships in the last graduating class.  If they don’t have any, walk!

Strategies: Selection, Admissions, College Funding

They should have Strategies: Selection, Admissions, and College Funding.  How can they help you select the right colleges? How can they help you with admissions?  What is their program prepares students to write application essays? How they help you with college funding and does not include loans?  If they don’t have these strategies then it would be like dealing with a doctor who could name the bones in the forearm.  This is fundamental to any kind of college funding advice or preparation.  They don’t do this, you need to walk.

In-House Test Prep

They should have In-House Test Prep.  A lot of the charlatans will outsource test prep so you get some token test prep organization or provide some token test prep program.  A lot of your bigger charlatan organizations will actually send you to Khan Academy, Kaplan, or Princeton Review and say that they have the best program and so you just need to work with them and their coaches.

One of the largest organizations in the country that trains insurance masqueraders essentially tell their clients to use Kaplan and they get Kaplan to them at a slight discount.  This particular company is specifically set up to train insurance people to be masqueraders.  The guy that runs a company doesn’t even have a college degree, but they’re very good at charging people a lot of money for token services.  They make millions of dollars doing this.

Answer Key Questions

They have to be able to Answer Key Questions.  What are those key questions…?

Did they go to college? If they didn’t, you need to walk.  Whatever spin they give you for why they don’t have a degree, if they’re in this business for any reasonable amount of time they need to go back and get a degree just to have some form of legitimacy.

My wife, later in life, finished her degree Harvard (yes, that Harvard), so it’s never too late.

Do they have any Ivy League admissions? A lot of times they will say, “Well we don’t do that” or “Your kid isn’t qualified.” Then my question is, “How do you expect to help my kid?”

Most of these people could not name the Ivy League colleges.  This problem is not limited to the charlatans.  A few years ago I was speaking at the Texas school counselors’ conference and I conducted a workshop in one of the first things I asked was to name the Ivy League colleges.  I was there in a room with 40 high school counselors many of whom had doctoral degrees and they could not come up with an accurate list of Ivy League colleges.

Do they have any Service Academy admissions?  Have they sent anybody to West Point or the Naval Academy or the Air Force Academy?  Most high school counselors couldn’t name the service academies.  They get the big ones: West Point, Annapolis, Air Force Academy, but there are two more than most people don’t know about.

What are their Top-Tier admissions?  Top-tier is different from Ivy League.  Top-tier are those colleges that are considered among the best in the country but don’t happen to be in the Ivy League.

By the way, a college in the Ivy League does not indicate that it is somehow among the elite colleges in the United States.  Colleges don’t get into the Ivy League based on their academic reputations.  The Ivy League is an Athletic Association.  They play each other in football, basketball, and lacrosse etc.  Membership in that Athletic Association has nothing to do with academic reputation.  Indeed, when the top 10 colleges in the country are listed usually only three or four of the Ivy League colleges on that list.

Top Tier colleges generally are considered as good and in some cases better than Ivy League colleges.  These include MIT, Stanford, Berkeley, Virginia, Michigan, Tufts, Georgia Tech, North Carolina, and a host of others.

Most of these people don’t know what Top Tier means.

What’s their experience with Division I Scholarships?  I would venture to say that they wouldn’t even know what Division I means.

What is their Full Scholarship history?  If they don’t do full scholarships don’t waste your time.  If they haven’t gotten someone into an Ivy League, Service Academy, Top-tier admission, Division I scholarship, or full scholarship, it is like taking advice from a doctor who’s never seen an x-ray or doesn’t know what to look for in blood test.

If they are missing any one of these, you should walk.

But invariably there will be parents who sit down with these people, run their credit card, realizing too late that they’re not getting what they thought they were going to get and I get a lot of refugees from these people.

“What can we do now, Dr.  Beasley?”

I don’t know.  We can try to salvage this.  Sadly, this happens all the time.

$6 Billion Industry

This phony college funding gambit, as I call it, is a $6 billion industry.  Yet we get more college debt and more parent debt because some of these people refinancing the house.  People lose money.  People raid their retirement accounts.  People just don’t know, and what little they know is taken advantage of by these bogus people.

Most College Funding Advice

And most of the people out there are getting advice from

…someone told me…

…I heard that…

…I always thought…

She got her kid in…

Chicken Licken said…, Foxey Loxey said…, Cocky Lockey said…, Loosey Goosey said…

…and because there are so many people who don’t know, this is a $6 billion industry of people paying full price for token help, if anything at all.  They are not going college professionals and think anybody out there that has college _____ in their title is a professional and they are not.  If they regulated this industry like they regulated the medical industry, there would probably be hundreds of thousands of people in jail.

And I’m talking straight with you right now because I see these bogus college funding people every day and I see their victims every day.  I saw them at an office building every day and they knew what I thought of them and they never wanted to talk with me.

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