Don't Be Taken in by Their Friendly Grins
Scholarship scams are costly and common enough to catch the attention of the U.S. Federal Trade Commission, and those of us in the business of college admissions. These companies guarantee or promise scholarships, grants or fantastic financial aid packages, and those promises have a price tag attached.
Many pitch these high pressure tactics at seminars where you're required to pay immediately or risk losing out on the "opportunity." Never fall for this.
Some unscrupulous companies promise they can get scholarships on behalf of students or award them "scholarships" in exchange for payment in advance. Many offer a "money back guarantee"- but attach conditions in the small print that would make it impossible to ever get the refund.
Others provide nothing after the student's payment - not even a list of potential sources; still others tell students they've been selected as "finalists" for awards that require an up-front fee.
Sometimes, these scholarship scams companies ask for personal information, saying they need it to ensure eligibility. Little known is that they can then debit the account without the student's consent. In general, be very cautious about giving out any personal information, including your SS number and address.
Other companies request a small "monthly" or "weekly" fee and then ask for authorization to debit your checking account. They can do this for an undetermined length of time.
The Federal Trade Commission cautions students to be on the lookout for these telltale hooks, indicators of scholarship scams:
- "The scholarship is guaranteed or your money back."
- "You can't get this information anywhere else."
- I just need your credit card or bank account number to hold this scholarship."
- "We'll do all the work."
- "The scholarship will cost some money." (It never costs money to apply for, or win a scholarship.)
- "You've been selected" by a "national foundation" to receive a scholarship - or "You're a finalist" in a contest you never entered or don't remember entering.
If you attend a seminar on financial aid or scholarships, follow these steps and listen carefully for clues to scholarship scams:
- 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 nerve-racking tactics.
- Investigate the organization you're 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 extraordinary success - the seminar operation may have paid "shills" to give glowing stories. Instead, ask for a list of at least three local families who've used the services in the last year. Ask each if they're 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 of scholarship scams, despite stated refund policies.
Many legitimate 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. And, there are scholarship search engines on the World Wide Web. The difference: Legitimate companies never guarantee or promise scholarships or grants.
This site includes information from the College Parents of America. CPA is a resource, advisor and advocate working on behalf of the millions of parents of current and future college students throughout the United States. For more information about CPA, call toll free 1-888-256-4627
or read about scholarship scams at College Parents of America
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