Scholarship Scams

Watch Out for Scholarship Scams!

Scholarships can be a great way to fund your college education-just as long as you don't become a victim of a scholarship scam!

When it comes to scams, keep this in mind: If someone is asking you to pay money to get money, it's probably a scam. No matter how legit the agency, lender or foundation sounds, if they want you to pay up. They're probably trying to rip you off.

Kimberly Stezala, the founder of ScholarshipStreet.com and author of   "Scholarships 101: The Real-World Guide to Getting Cash for College," says her biggest pet peeves is when scholarship scammers use the word "guarantee."

"This preys on desperate students," Stezala says. "No one can guarantee anything, when it comes to scholarships."

"When I ask my students how many of them receive "guaranteed" offers in the mail, about a quarter of their hands go up. I then share the basics covered by the Federal Trade Commission (www.ftc.gov), and explain how students can be better consumers of information," she advises.

Typical Scams
Chris Pesotski, the director of financial aid at The University of the Arts in Philadelphia agrees with Stezala, saying scammers try to fool people into thinking there are guarantees or short cuts in scholarship.

"There are people out there who are trying to take advantage of parents who just want to do what is best for their kids," he says.

Pesotski explains that con artists have a few typical scholarship scams, the most popular being to charge exorbitant fees to do a "guaranteed" scholarship searches for families.

"They will they take anywhere from $50 to $500 from a family to match their student with potential scholarships," Pesotski says. "You give the scammer your personal data, which they enter into various free public scholarship searches. Then they give you a list of scholarships that might or might not be filtered to match your situation.

"You could have gotten that same list yourself for free--without giving your personal data to a scammer who might or might not use it to steal your identity."

As if that scam wasn't bad enough, there is a second major con that occurs when scammers set up bogus "scholarship contests" and charge an entry fee to participate.

"Sometimes it's $20 or $30, sometimes it's even as high as several hundred dollars," Pesotski warns. "They scam thousands of parents into paying the bogus fee and award one small scholarship. There's no legitimate scholarship in the world that charges and application or "reading fee." Applying for scholarships and financial aid should always be free."

If you have successfully dodged the first two scams, make sure you don't fall for the final one: Being duped into paying to apply for financial aid.

"Don't ever pay anyone to fill out the Free Application for Federal Student Aid (FAFSA)," Pesotski cautions. "It's not hard to do yourself, and if you get stuck, there are plenty of sources of free help available on www.fafsa.ed.gov or from 1-800-4-FED-AID.

"Don't ever go to www.fafsa.com and pay their crazy fees for a service that is available for free," he says.

What Should I Do if I Get Scammed?
Tens of millions of dollars are lost each year to scholarship scams. What if you fall victim?
Make sure you report it to the Federal Trade Commission (FTC). Also, on November 5, 2000, Congress passed the College Scholarship Fraud Prevention Act (www.ftc.gov/os/2004/05/2004collegescholarshipfraudrpt.pdf), which established stronger sentencing guidelines for such fraud. So check out the site for further information.

Phrases to Look For
Watch for these scholarship scam warning signs:

We'll do it all!
No one should fill out scholarship applications for you. The process will take some work on your part, so don't believe anyone saying they will do everything.

We're the only ones with this information!
This is never true. Scholarship listings and information is free and easy to find from a number of public sources.

You've been selected!
If you get a notice saying you have been selected to receive a scholarship or that you've won an award, make sure you thoroughly look into the organization. It is typically a scam, especially if they say they need credit card or bank account information to hold the scholarship money. Don't ever give away your financial information!

Guaranteed... or your money back!
Sorry, kids. There are no guarantees.

It will cost some money... But you will make more!
Free grant or scholarship money, should be just that: free. Organizations asking for fees upfront are probably scams.

Scam-Free Scholarship Links!
College Board:
http://apps.collegeboard.com/cbsearch_ss/welcome.jsp

FTC Scholarship Scam Site:
http://www.ftc.gov/bcp/conline/pubs/alerts/ouchalrt.shtm

Careers and Colleges:
www.careersandcolleges.com

Alloy Education:
www.alloyeducation.com/scholarships/index.htm

Financial Aid Info
U.S. Department of Education:
http://studentaid.ed.gov/PORTALSWebApp/students/english/index.jsp

The Financial Aid Information Page:
www.finaid.org

This blog was written by Valerie Anderson

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