Scholarship Matching Services

The number of companies offering undergraduate and graduate students private sector scholarships and financial aid for college has grown significantly. For a processing fee ranging anywhere from $49.95 to hundreds of dollars, these companies guarantee they will match the student with 6 to 25 potential sources of little known funds from private organizations. These funds can be based upon athletic skill, ethnic background, religious background, hobbies, interests, etc.

Better Business Bureau experience with scholarship matching services has shown that although students may receive "potential" sources of aid, few, if any at all, receive the actual funds. Some consumers have indicated that they did not receive the guaranteed number of sources, or they received government information instead of promised information about private sources. Other consumers have claimed they did not qualify for aid because the sources sent were inaccurate and did not correspond with information supplied on their student profile. And still other students stated they received the list of sources after the application deadline had already passed and, therefore, could not even apply to the source. In addition, consumers often indicate they were unable to obtain refunds of their fee, as promised. Typically, companies require students to supply rejection notices in order to receive funds. However, students complain that they send in application forms, but often receive no notice if they are rejected.

The BBB has found that these scholarship-matching companies are often "licensees" or "information brokers;" they do not actually provide the scholarship matching services themselves. The licensee company does not assist students in obtaining financial aid nor do they screen the applicants. It simply sends out the scholarship information and application to the student and then forwards the student’s completed application to its "parent" company. This company matches the student with "potential" sources of funds found in their database. The parent company then sends out the list of sources to the student. It is then the student’s responsibility to research and contact each organization listed as a potential source. All offers and guarantees (other than the processing fee) are made by the parent company.

These companies, therefore, cannot and do not guarantee that a student will receive funds for school. The only guarantee is that the students will receive a specific number of potential sources of funds. Most services claim they offer a 100% money back guarantee if the specific number of sources is not provided, but it is the student’s responsibility to substantiate that he/she did not receive the sources. Students should also stay away from companies advertising ways to alter information or "cheat" on Financial Aid forms. Many of these are government documents and should not be misused.

Why do people retain these services when there is no guarantee that applicants will receive actual funds? According to a Director of Financial Aid at one prominent New York City University, these companies may appear to save students the hassle of researching their own sources. Students who do not have a great deal of time to invest in preliminary financial aid research may be tempted by the services offered by these companies.

Moreover, it is not only the students who must be wary of these services. Anyone interested in becoming a licensee of a parent company must also beware. In 1996, the Federal Trade Commission charged Career Assistance Planning (CAP) with misrepresentation of the nature and sources of CAP’s services. FTC v. Career Assistance Planning, 19 WL 929696, 1997-2, N.D. Ga. (Sept. 19, 1996). The charge arose under §5(a) of the FTC Act, which prohibits unfair or deceptive commerce practices.

One of CAP’s claims was that past CAP customers had 60% to 80% success rate, "while the only basis for this claim was the fact that between 20% to 40% of past CAP customers complained or asked for refunds."

The Georgia Federal District Court ruled that the defendants were to:

  1. Post a $6,000,000 performance bond before engaging in telemarketing sales in the future;

  2. Affirmatively disclose that they cannot predict whether their customers will obtain scholarships through CAP services in the event defendants re-enter the college scholarship search business; and

  3. Have their compliance with all terms of the order monitored by the FTC.

Consumers should also be aware that there are other alternatives available regarding financial aid research. Students can get the best information from their high school guidance counselor, college financial aid office, school and public library. Many schools also offer the use of on-line computer software programs, which provide students with financial aid information.