| By Adam Wilkenfeld
CWK West Coast Bureau Chief
as I’m concerned, if it SOUNDS too good to be true, it IS
too good to be true. It’s not true.”
-Mandy Bamdad, a mother-
| The cost of a four-year college education has
shot up more than 600% in the past 30 years. About $90 billion
in scholarship money is available to help defray that cost,
along with hundreds of scholarship scams that promise money
and then take it away instead.
Many parents and high school seniors are overwhelmed by the
forms, worried about the costs but are also excited about
the future. All of these emotions make them an easy mark for
scam artists who promise to find them scholarship money.
“Well, we did pay over a thousand dollars I think,”
says Rosendo Carranza of a service that failed to find his
daughter a single scholarship dollar.
“If they would have kept their promise, I wouldn’t be
paying for school right now,” says 17-year old Nillie,
referring to a scholarship service to whom she paid $1,700
to help get her recruited to a college athletic program.
According to the Federal Trade Commission, tens of thousands
of high school students are victimized by scholarship scams
each year. Many claim to help students get “their share”
of “billions of billions of unclaimed scholarship dollars.”
“But don’t let anybody else do it for you,” advises
Richard Pfaff, assistant director and administrator of Financial
Aid and Scholarships at San Jose State University. “If
someone comes up and says, ‘If you pay me $500, I’ll make
sure your son or daughter gets a scholarship,’ don’t listen
to any of those people because you can do it all yourself.”
If they say you have to pay money to get money, if they make
guarantees or say you are a “finalist” in a competition
you never entered or if they say “you can’t get this
information anywhere else,” then experts warn that they
are probably lying.
“All of that information is out there for free,”
Pfaff explains. “There are people in your high school,
as well as your colleges, as well as the Internet that are
more than willing to give you all of that information, for
Victim to Scholarship Scams
By Pam Frazier
CWK Network, Inc.
According to an annual
College Board survey, college tuition recently surpassed a
10-year high, increasing by 9.6% at public, four-year universities
and more than 5.8% at private, four-year universities. This
increase does not include additional expenses of room and
board, transportation, books, computer and/or lab fees, and
in light of these findings, it is not surprising that many
universities have reported record numbers of submitted financial
aid applications. But as budgets get slashed and tuition costs
outpace federal aid increases, many students are being forced
to find alternative ways to pay for college.
Unfortunately, the search for college money sometimes leads
to fraudulent companies who search for deceptive ways to steal
money and make empty promises. The Federal Trade Commission
(FTC) says that these companies use various tactics that usually
involve a guarantee of scholarships, grants or financial aid
packages for advanced fees. Some even use high-pressure sales
pitches at seminars that require immediate payment to prevent
losing out on the “opportunity.”
Parents Need to Know
In the year 2000, Congress passed the College Scholarship
Fraud Prevention Act to establish stricter sentencing guidelines
for criminal financial aid fraud. The act gives the U.S. Department
of Education (DOE) and the FTC the responsibility of implementing
national awareness activities, including a scholarship fraud
awareness site on the DOE website. The legislation also requires
the U.S. attorney general, the secretary of education and
the FTC to submit a consolidated report to Congress each year
assessing the nature and quantity of scholarship fraud incidents
since the date of enactment.
The FTC advises parents and students to be cautious of companies
that use phrases like “we’ll do all the work,” “guaranteed
or your money back” or “you can’t get this information
anywhere else.” It also offers the following advice for
you and your teen in the event that you attend a financial
- Take your time. Don’t 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. Solid opportunities are not sold through
- Investigate the organization you
are considering paying for help. Talk to a guidance
counselor or financial aid adviser before spending your
money. You may be able to get the same help for free.
- Be wary of “success stories”
or testimonials of extraordinary success. The seminar
operation may have paid people to give glowing stories.
Instead, ask for a list of at least three local families
who have used the services in the last year. Ask each if
they are satisfied with the products and services received.
- Be cautious 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 you information
about their service.
- Ask how much money is charged for
the service, the services that 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 refund
FinAid offers these additional tips to help you avoid becoming
a victim of a scholarship scam:
- If you must pay money to get money, it might be a scam.
- If it sounds too good to be true, it probably is.
- Spend the time, not the money.
- Never invest more than a postage stamp to get information
- Nobody can guarantee that you will win a scholarship.
- Legitimate scholarship foundations do not charge application
- If you are suspicious of an offer, it is usually with
Reputable places where you can find alternative sources of
financial aid do exist. If your teen is ineligible for federal
need-based grants, you should consider applying for merit-based
grants, which are based on academic and other non-financial
criteria. Officials at the National Association of Student
Financial Aid Administrators report that in the past 10 years,
merit-based grants have tripled and account for 45% of all
When searching for scholarships online, experts say that
it is best to use a personalized search that compares individual
backgrounds with a database of awards. FastWeb offers free
scholarship searches based on demographic profile and offers
similar services that fraudulent companies perform for compensation.
The U.S. DOE also has a website that provides federal student
aid program information and scam warnings.
Association of Student Financial Aid Administrators
Department of Education