Caveat Emptor or Buyer Beware 7: A Few Typical Scholarship Scams

Saturdays we share tips of cautions to facilitate getting scholarships or avoiding problems

Jenny had two daughters. One in high school. One still in junior high school. Jenny desperately wanted her daughters to attend college, but did not have the money to pay their tuition. Few students from their high school went on to college. As a result, the guidance counselors in her daughter’s school did not provide much help. So, Jenny went online and found a company that guaranteed they would apply for more than 100 scholarships on behalf of her daughter—and they guaranteed she would receive scholarship money. They would only charge $1,500 for the service. She paid the money. Her daughter earned exactly $450 in scholarships.

Cost of Scholarship Scams and Schemes

FinAid, an expert on financial aid for students, tells us “Every year an estimated 350,000 students and parents fall prey to scholarship scams, at an annual cost of more than $5 million. The lure of "Free Money" fools even skeptical people.”

The Federal Trade Commission warns “According to the Federal Trade Commission (FTC), the nation's consumer protection agency, 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.”

Signs of Scams

The FTC says you can notice the following warning signs and avoid those that promise:

• “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. You just pay a processing fee.”
• “The scholarship will cost some money.”
• “‘You are a finalist in a contest you never entered.”
• “You’ve been selected by a national foundation.”

FinAid suggests:

• “If you have to give money to get money, it might be a scam”
• “If it sounds too good to be true, it probably is”

Report scams to your Better Business Bureau or send an email to scams@finaid.com.

Tuesday we review ScholarshipLibrary.com a wiki with information about sources of funding