Six Ways to Spot Scholarship & Financial Aid Scams
March 25, 2013
The next few weeks will bring acceptance letters for college-bound students and many are applying for scholarships and financial aid for the 2013-2014 school year. With the cost of college outpacing inflation and crimping family budgets, many students and their families are eager to find resources to help pay for higher education. The Better Business Bureau Serving Metropolitan New York advises students and their parents to be wary of websites, seminars or other schemes that promise to find scholarships, grants or financial aid packages for an upfront fee.
“Finding a way to pay for a college education can be very stressful for students and their parents and many are overwhelmed by all the information available,” said Claire Rosenzweig, President and CEO of the Better Business Bureau Serving Metropolitan New York. “Students and parents need to be able to recognize the signs of a possible scholarship scam so that they can make safe and appropriate financial aid choices.”
Scholarship scams can take many forms. A company may tell a student they've been selected as a finalist for a grant or scholarship but must pay a fee to be eligible for the award. Another will send prospective college students a letter explaining they have been selected for a personal interview but instead are invited to a financial aid seminar. Attendees of these seminars often pay many hundreds of dollars for help finding aid, but the services offered are mostly assistance in filling out financial aid forms. However, the standard application process for financial aid is most often the Free Application for Federal Student Aid (FASFA), which students and their parents can complete themselves at no cost by visiting www.fafsa.ed.gov.
To avoid scholarship and financial aid scams, BBB cautions all to watch out for these six red flags:
1. “The scholarship is guaranteed or your money back.” In reality no one can guarantee that they will get you a grant or scholarship. The refund guarantees that are offered usually have so many conditions or strings attached that it is almost impossible for consumers to get their money back.
2. “You cannot get this information anywhere else.” Actually, scholarship information is widely available in books, from libraries and financial aid offices and on the Internet, if you are willing to search for it.
3. “We will do all the work.” Only parents and students can really determine and provide the financial information needed to complete the forms.
4. “You have been selected by a national foundation to receive a scholarship.” If you have not applied for a scholarship sponsored by the foundation, be skeptical about this claim.
5. “May I have your credit card or bank account number to hold this scholarship?” This is never a requirement for a legitimate scholarship offer. Don’t give out your financial information in this kind of situation.
6. “The scholarship will cost some money.” Legitimate scholarship offers never require payment of any kind.
Individuals interested in using a scholarship service are urged to investigate the background of a company and to use the Better Business Bureau’s online Business Reviews to see what we say about the company at our website: www.newyork.bbb.org, or by calling the BBB at (212) 533-6200. Be sure to ask the company to put details of its services and promises in writing, including the refund policy.
For more tips you can trust, visit www.newyork.bbb.org, and to sign up for our weekly scam alerts, visit https://cbbb.wufoo.com/forms/email-sign-up/.