Ouch! Students Getting Stung -
Trying to Find $$$ for College, May 1999
Need 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
The FTC cautions students to look and listen for these tell-tale
- "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
- "We'll do all the work."
- "The scholarship will cost some money."
- "You've been selected" by a "national foundation" to
receive a scholarship - or "You're a finalist" in a contest you never
If you attend a seminar on financial aid or scholarships, follow
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 grants.
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.
Courtesy of: The United States
Federal Trade Commission