THE BAIT: "I'M A CERTIFIED COLLEGE FUNDING EXPERT"
The titles carry a ring of authority: College funding adviser. Certified college adviser. Certified college planning specialist. Certified college planning relief specialist.
At least 1,300 college financial planners boast of these professional labels; the vast majority -- more than 90%, according to the heads of the various associations they belong to -- are also insurance agents. The problem is, to earn these titles, planners get a lot of instruction in marketing to parents but little mandatory training in college savings strategies and financial aid.
Consider, for instance, what's involved in earning membership in the National Association of College Funding Advisors: Only two of the initial 12 hours of training are about financial aid; the rest focus on marketing techniques, such as scripts and presentations to deliver at college funding workshops designed to recruit new clients, says NACFA president Austin.
This instruction is sufficient, he adds, because members are supposed to focus on insurance and outsource parents' college-related questions about admissions and financial aid to the College Planning Network, a sister company that employs former admissions officers and other college experts.
Some other groups grant certifications after a few more hours of initial study, then passing an online -- and, so, open book -- test. (All of the groups also have some continuing education requirements.) By contrast, to become a certified financial planner, candidates must pass a two-day, 10-hour proctored exam covering many financial topics.
There's another key difference:
Unlike the CFP designation, which is recognized by most state insurance departments, none of the college financial planning organizations have registered with regulatory authorities to make their certifications official. Rick Darvis, head of the National Institute of Certified College Planners, the oldest group, says it is up to individual members to worry about obeying state laws.
The National Association of Insurance Commissioners and other regulators contacted by MONEY were largely unaware of the college planning certifications. According to Sharon P. Clark, head of the NAIC's committee on life insurance, the seemingly scant training of college funding specialists could violate rules in most states that bar agents from presenting themselves as advisers when their real goal is to sell insurance. Certification from an unapproved organization, she says, could also cross the legal line into false advertising.
For now, the lack of oversight leaves parents to mostly fend for themselves against advisers who may be dispensing incorrect information and bad advice -- something Donald Wisdom, president of an IT integration company in Santa Clarita, Calif., knows firsthand.
In 2010, Wisdom paid $3,500 to Brian Safdari, a certified college planning specialist with College Planning Experts for advice about aid and help in selecting colleges for his son, then 17. He says, "I just wanted my kid to be able to go to the college he wanted to go to."
Wisdom says that Safdari warned him that a rental property he owned could raise the amount he was expected to pay by 12% of his equity in the place.
He says Safdari then urged him to take out a bigger mortgage to reduce his equity and put the proceeds into an insurance policy that wouldn't be counted in the financial aid formula. When Wisdom's own research showed the maximum hit on the rental would be just 5.64%, he demanded and got a refund.
He then paid another counselor a few hundred dollars to suggest colleges and filled out the financial aid forms himself. His son ended up getting $32,000 in annual scholarships to the University of San Diego, a private school.
Safdari stands by his comment that certain assets can reduce need-based aid up to 12%, although when asked, he could not provide any examples. He also notes that private schools can use whatever calculation they want when awarding their own scholarships, and that "there is a lot of confusion" over the complicated federal formula.
How to avoid the trap
Pay only for what you need. An admissions consultant can help you zero in on affordable schools by developing a list of appropriate state universities and a few private colleges likely to award scholarships to your child. Expect to pay $135 an hour, on average.
Find a consultant through the National Association for College Admission Counseling, the Independent Educational Consultants Association, or the Association of Independent Certified Education Planners.
More interested in help saving for college expenses? Your best bet is to work with a fee-only financial planner, who won't be tempted to sell you a big-commission policy (find one with college expertise at napfa.org).
Trust but verify. Before committing big bucks to a college funding adviser, make sure he or she knows the facts. This quiz is a good start.
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