Headquarters of JP Morgan Chase & Co., JP Morgan Chase Tower in Park Avenue, Midtown, Manhattan, New York.
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Earlier this week, JPMorgan Chase shut down college financial aid platform, Frank, acquired in September 2021 for $175 million, alleging that it misrepresents the size of the startup.
Consumers who have used the platform may well have been deceived.
According to JPMorgan, founder Frank Charlie Javice told the bank that more than 4 million students have signed up with the company, which promises to ease the student loan and financial aid application process. But when the bank sent marketing emails to a series of 400,000 Frank customers, about 70% of the messages bounced, the bank said in a report. lawsuit filed last month in federal court.
Previously, JPMorgan spokesman Pablo Rodriguez introduce a CNBC reporter on the lawsuit against Javice, said that “any dispute will be resolved through the legal process.” Javice’s attorney, Alex Spiro, did not respond to an email requesting comment.
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‘If it’s too good to be true, it probably is’
Before JPMorgan acquired the startup in 2021, lawmakers and consumer watchdogs expressed concern about Frank’s marketing claims.
Bipartisan members of Congress wrote a letter to the Federal Trade Commission in July 2020, saying that Frank was “creating false hope and confusion among students” by advertising the single apply for pandemic relief funds, including new emergency student grants.
“These funds are distributed by and at the discretion of individual institutions and, therefore, it is not possible to provide a unified, legal application for this grant,” the lawmakers said. Written, added that they suspect the company is exploiting student data for profit.
In response, the FTC sent a warning letter with Frank, pointing out some of the claims on its website could be “unlawfully misleading to consumers.” For example, it says consumers can get a cash advance of up to $5,000 on their student loans with no interest or fees, even though Frank charges $19.90 a month .
Besides the issues raised by government officials, higher education expert Mark Kantrowitz said he noticed other questionable claims by Frank. At one point, the company said it could complete anyone’s free Application for Federal Student Aid, or FAFSA, in as little as four minutes.
According to the US Department of Education, he noted, it is necessary to about an hour For new applicants to complete the form, this is the primary way students request financial aid to help them pay for college.
“If that’s too good to be true, it probably is,” says Kantrowitz.
Student loans, financial aid help available for free
Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit organization, says there are many free resources that families can turn to for help with financial aid.
“The simplest thing to keep in mind is that no one has to pay for student loans or financial aid,” says Mayotte. “Doing so will never get you access to a program you wouldn’t normally be eligible for.”
The best place to start looking for help is at the Department of Education website, studentaid.govMayotte said.
In addition, the nonprofit organization mappingyourfuture.org and TISLA freestudentloanadvice.org She also doesn’t charge a fee for a comprehensive financial aid consultation.
