Beware of Scholarship Scams

(The following content was previously available on guideforparents.com, developed and maintained by Jan A. Maas)

Have you heard about the "billions of dollars" in financial aid money that "went unclaimed" in past years?

Has your family been invited to pay a "processing" fee to a company that will "guarantee" you a scholarship?

Watch out! Because these are some of the common signs of a scholarship scam — the kind of operation that hits thousands of unwary families each year.

Here, from the $cholarship $cams Site of the Federal Trade Commission, is a list of six "lines" scammers use:

• "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."
• "You've been selected" by a 'national foundation' to receive a scholarship or "You're a finalist" in a contest you never entered.

Testimony at a Senate Hearing

In October, 1999, the Senate Judiciary Committee held a hearing on a proposed law that would help protect families from fraud. Four people provided statements for that hearing, and their testimony makes interesting reading.

• Sheila F. Anthony, a Comissioner of the Federal Trade Commission, describes the proposed legislation. She warns families who are approached by scholarship services not to "rely solely on 'success stories'" but instead "ask for a list of three local families who have used the service in the last year."
• Sanjeev Bery tells how he and his family were victimized, paying $200 for a "terrible" list of scholarships that had nothing to do with his background or goals.
• Mark Kantrowitz, publisher of the FinAid website, goes into detail about how these scams work, and explodes the "billions of dollars in unclaimed aid" myth.
• Susan O'Flaherty, Director of Financial Aid and Scholarship at Western Michigan University, talks of the types of fraud she has seen in her years as a financial aid officer.

Further Sites about Scams

Ouch! Students Get Stung Trying to Find $$$ for College:  Outlines the steps cautious families can take if they think a scammer is at work. Gives the address, website and phone numbers families can use to file a complaint with the Federal Trade Commission.

Avoiding Scams and Dubious Offers:  The producer of the FreSch! website was herself the victim of a scam. This page reviews the common signs of a scam, and provides advice on how to investigate a scholarship search company and what to do if you feel you have been scammed.