Beware of Scholarship Scams

Friday, 03 Apr 2009 11:55 AM

By Bruce Mandelblit

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Right now, especially in this tough economy, many students and their families are struggling to determine how they will pay for the upcoming, ever-escalating college tuition fees. Over the past decade, university costs have risen at about twice the rate of inflation.

For instance, Collegeboard.com reports that the 2007-2008 average yearly costs were as much as $1,404 higher than last year, depending on the type of college (for example: costs up 4.2 percent from last year for students attending two-year public colleges; costs up 6.6 percent from last year for students attending four-year public colleges and universities; and coasts up 6.3 percent from last year for students at four-year private colleges and universities).

Today, as college costs continue to skyrocket, many parents and students must face the daunting task of trying to obtain funds for a higher education.

Like ravenous vultures waiting for their meal ticket, countless crooks have, unfortunately, taken advantage of this tight tuition money reality. There are currently dozens of active scholarship and financial aid schemes.

According to the Federal Trade Commission (FTC), fraudulent firms purport to guarantee or promise generous scholarships, grants and mind-boggling financial aid packages. Many of these fiscal thugs, in fact, use persistent “high pressure” sales pitches at seminars where anxious parents and students are requested to pay immediately or risk losing out on these fake sources of college funds.

A common tactic of these unscrupulous companies is to “guarantee” that they can get scholarships for students in exchange for an advance fee.

To lend an aura of credibility to their conniving sales pitch, many of these phony scholarships firms offer a “money back guarantee.” The only problem is that these companies attached so many conditions to that offer, they make it virtually impossible to ever receive a refund.

Other appalling tactics used by these scam artists include telling students that they have been selected as “finalists” for awards that require upfront fees.

Sometimes, companies ask for the parents' or the student’s bank account information to ultimately debit the account without the account holder’s permission. And, believe it or not, some firms offer absolutely nothing — not even a list of potential scholarship sources — after taking a student’s hard-earned money.

What are the “danger signs” of a possible scholarship or financial aid scam?

The FTC offers these tell-tale cautions:

• “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.”

• “You’re a finalist in a scholarship contest.”

In addition, if you attend a seminar on obtaining scholarships and financial aid,

the FTC suggests:

• Take your time. Don’t be rushed into paying at the financial seminar. Avoid high-pressure sales pitches that require you to buy now or risk losing out on the opportunity. A Quick Tip: “Genuine” opportunities are not sold using nerve-racking tactics.

• Investigate the organization you’re considering paying for financial assistance. Talk to a guidance counselor or financial aid adviser before spending any money. A Quick Tip: You may be able to receive the same scholarship or financial aid for free!

• Be wary of so-called success stores or other testimonials or extraordinary success. A Quick Tip: Some seminar operators may use paid “shills” to offer glowing success stories. A better idea is to ask for a list of at least three local families who have used their services in the last year. Ask each family if they are satisfied with the services received.

• Be cautious about purchasing from seminar representatives who are reluctant to answer questions or who give evasive answers to questions. A Quick Tip: Legitimate businesses are more than willing to give information about their services and products.

• Ask about 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. A Quick Tip: You may never recoup the money you give to an unscrupulous operator regardless of their stated refund policy.

It is important to note that there are many legitimate firms in the scholarship and financial aid business. These authentic companies sometimes advertise that they can get students lists of scholarships in exchange for an advanced fee.

Other genuine firms change an advance fee to compare a student’s profile to a database of scholarship and financial aid opportunities. Also, there are Internet scholarship search engines that may charge a fee.

According to the FTC, the difference between these honest companies and fraudulent scholarship enterprises is simple: Legitimate companies NEVER guarantee or promise scholarships or grants!

For more information on this crucial topic for all college students and their parents, check with the FTC’s Web site at www.ftc.gov and the College Parents of America’s site at www.collegeparents.org.

My Final Thoughts: Although college money may be especially hard to locate during this economic crisis, don’t let these heartless con artists block your pursuit of finding authentic funding for a college education. The good news is, according to Collegeboard.com, there are millions of dollars in bona fide financial aid available to parents and students.

The U.S. Census Bureau reports that people with a bachelor’s degree earn about 62 percent more on average than those with only a high school diploma, which can translate to an extra lifetime earnings of over $1 million.

It is well worth the time to research and locate the vast sums in legitimate college scholarships, grants, and other financial aid that is available to so many Americans.

Bruce (Mandelblit.com) is a nationally known security and safety journalist, as well as a recently retired, highly decorated reserve law enforcement officer. His email address is: CrimePrevention123@yahoo.com.

This column is provided for general information purposes only. Please check with your local law enforcement agency and legal professional for information specific to you and your jurisdiction.

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