bills and room and board costs skyrocketing, students and their families are
looking for creative ways to finance a college education. Unfortunately, many
families fall prey to scholarship and financial aid scams.
companies promise scholarships, grants or fantastic financial aid packages.
Many use high pressure sales pitches at seminars where you are required to pay
immediately or risk losing out on the “opportunity.”
companies make false guarantees that they can get scholarships on behalf of
students in exchange for an advance fee. It is a scam! Most offer a
“money back guarantee” – but attach conditions that make it impossible to get a
Scammers do not
provide anything for the student’s advance fee – not even a list of potential
sources. Still others tell students they have been selected as “finalists” for
awards that require an up-front fee.
these bogus companies ask for a student’s checking account information to “confirm
eligibility,” then debit the account without the student’s consent. Other
companies quote a small “monthly” or “weekly” fee and then ask for
authorization to debit your checking account – for an undetermined length of
claim they have programs that could make you eligible to receive financial aid,
including grants, loans, work-study and other types of aid. For a processing
fee, they will handle all the paperwork.
that the only application that will determine eligibility for all programs is
the Free Application for Federal Student Aid (FAFSA).
The Bureau of
Consumer Protection cautions students to look and listen for these tell-tale
scholarship is guaranteed or your money back.”
“You cannot get
this information anywhere else.”
“I just need
your credit card or bank account number to hold this scholarship.”
“We will do all
the work for you.”
scholarship will cost some money.”
“You have been
selected” by a “national foundation” to receive a scholarship.
“You are a
finalist” in a contest you never entered.
If you attend a
seminar on financial aid or scholarships, follow these steps:
Take your time.
Do not be rushed into paying at the seminar. Avoid high-pressure sales pitches
that require you to buy now or risk losing out on the opportunity. Legitimate
opportunities are not sold through high pressure tactics.
organization you are considering paying for help. Talk to a guidance counselor
or financial aid advisor before spending your money. You may be able to get the
same help for free.
Be wary of
“success stories” or testimonials of success – the seminar operation may have
paid “shills” to give glowing stories. Instead, ask for a list of at least
three local families who have used the services in the last year. Contact those
families and ask if they are satisfied with the products and services received.
about purchasing from seminar representatives who are reluctant to answer
questions or who give evasive answers to your questions. Legitimate business
people are more than willing to give information about their service.
Ask how much
money is charged for the service, what services will be performed, and the
company’s refund policy. Get this information in writing. Keep in mind that you
may never recoup the money you give to an unscrupulous operator, despite stated
companies advertise that they can get students access to lists of scholarships
in exchange for an advance fee. Other legitimate services charge an advance fee
to compare a student’s profile with a database of scholarship opportunities and
provide a list of awards for which a student may qualify. There are also
scholarship search engines on the Internet.
companies never guarantee or promise scholarships or grants.
It is extremely
rare for legitimate organizations to charge a processing fee for a scholarship.
Some criminals imitate legitimate foundations, federal agencies, and
corporations. Do not be fooled by official-sounding names.
Do not give
anyone your bank account or credit card information or your Social Security
number (SSN) unless you are working directly with the Free Application for
Federal Student Aid (FAFSA). Giving personal identification information to
scammers could be used to steal your identity.
If you have any
questions, or require additional information on student financial assistance
school guidance counselor.
aid officer at the postsecondary institution you plan to attend.
Student Aid Information Center, toll-free at (800) 4-FED-AID [(800) 433-3243]
Department of Education – Federal Student Aid office offers a comprehensive
resource on student financial aid titled “Funding Your Education: The Guide to Federal Student Aid.”
tells you about the three major forms of aid programs available through them
(grants, loans, work-study) and how to apply. It can be found with additional
information at studentaid.ed.gov/sa
To apply for
federal aid and to apply for many state student aid programs, students must
complete a Free Application for Federal Student Aid (FAFSA). The FAFSA can be
completed online at fafsa.ed.gov
(Some information taken from the FTC fact sheet "Scholarship and Financial Aid Scams")