Students Getting Stung Trying to Find $$$ for College
money for college? Doesn't everybody? With tuition bills skyrocketing, and room and board
going through the roof, students and their families are looking for creative ways to
finance a college education. Unfortunately, in their efforts to pay the bills, many of
them are falling prey to scholarship and financial aid scams.
According to the Federal Trade Commission,
unscrupulous companies guarantee or promise scholarships, grants or fantastic financial
aid packages. Many use high pressure sales pitches at seminars where you're required to
pay immediately or risk losing out on the "opportunity."
Some unscrupulous companies guarantee that
they can get scholarships on behalf of students or award them "scholarships" in
exchange for an advance fee. Most offer a "money back guarantee"- but attach
conditions that make it impossible to get the refund. Others provide nothing for the
student's advance fee - 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 companies ask for a student's checking account to "confirm
eligibility," then debit the account without the student's consent. Other companies
quote only a relatively small "monthly" or "weekly" fee and then ask
for authorization to debit your checking account - for an undetermined length of time.
The FTC cautions students to look and listen
for these tell-tale lines:
"The scholarship is guaranteed or your
"You can't get this information
"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
"You've been selected" by a
"national foundation" to receive a scholarship - or "You're a
finalist" in a contest you never entered.
If you attend a seminar on financial aid or
scholarships, follow these steps:
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
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
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 policies.
The FTC says 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
This publication was produced in cooperation
with 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 visit CPA
online at www.collegeparents.org.
The FTC works for the consumer to
prevent fraudulent, deceptive and unfair business practices in the
marketplace and to provide information to help consumers spot, stop and
avoid them. To file a
complaint or to get free information
on consumer issues, visit
call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The
FTC enters Internet, telemarketing, identity theft and other fraud-related
Consumer Sentinel, a
secure, online database available to hundreds of civil and criminal law
enforcement agencies in the U.S. and abroad.
FEDERAL TRADE COMMISSION
FOR THE CONSUMER