The Federal Trade Commission has posted a well-timed reminder at www.ftc.gov about a disturbing increase in scholarship and financial aid scams aimed at high school seniors and their parents. As high school graduation draws near, students and their parents shift into high gear as they look for the money to cover the high cost of college tuition and housing. Confronted by the skyrocketing costs, they sometimes become easy victims of scholarship scammers.
Everybody needs money for college and it’s precisely this need that some less than scrupulous companies are exploiting. A favorite venue for setting the hook seems to be free seminars, where a savvy sales pitch is delivered with the promise of a guaranteed scholarship in exchange for an upfront fee. According to the FTC, students and parents are often lulled into these agreements by a reassuring money-back guarantee, which in fact has so many loopholes that a refund is for all practical purposes impossible to receive. Other scholarship scammers tout “scholarship awards”, but require a fee or even access to credit cards and checking accounts in order to verify a student’s “eligibility” for the award.
No matter how smooth the con job, students and parents can look for a few common warning signs that signal a phony scholarship offer. Any mention of a guarantee, for example, should raise a red flag immediately. Any scholarship offer or “award” that requires students or parents to surrender money, or even their credit card or banking information, is almost certainly fraudulent.
The FTC does acknowledge the existence of legitimate companies that match students with real scholarship opportunities for a fee, but here, too, consumers should take care to ask the right questions. Don’t fall for overblown success stories. Instead, make a point of asking companies for local references citing real people you can talk to about the quality of service and results. Last but not least, get any fee-for-service agreement in black and white.
The pressure of finding a way to pay for an expensive college education often causes students and parents to overlook one of the best sources for student aid: the Federal government! The Department of Education pays out roughly 80 billion dollars of student aid annually in the form of grants, work-study programs and loans. The opportunities available here are simply too good to overlook and they’re guaranteed to be scam-free. For more free information, visit studentaid.ed.gov, the home of Federal Student Aid on the Web!
