Beware of Scholarship Scams

If your child is a junior in high school, now is a great time to start looking for college scholarships. The deadline for awards are months away, giving you and your child a head start on applications, essays and other requirements for those awards.

Billions of dollars worth of scholarships are awarded each year to college-bound students. Some are based on financial need, others are based on a student's interests, academic and extracurricular achievements, ethnicity, religious affiliation or a family's relationship with a certain union, company or other group.

Weeding through the numerous types of scholarship offers can be overwhelming, leading some parents and students to seek help from scholarship services. The Better Business Bureau warns consumer to be careful. Despite their elaborate claims and professional images, many are scams.

Legitimate scholarship services tells students and their families up-front what they can and can not do for them. Typically, they provide students with lists of scholarships, compare their profiles with available scholarships, and provide lists of scholarship awards for which they qualify.

Fraudulent scholarship search services will promise to help you maximize your eligibility for financial aid at a cost of several hundred to several thousand dollars. Some services take your money and never look for anything on your behalf; others provide a list of scholarships for which your child is not eligible. Although some services will come up with a list of scholarships that your child does qualify for, the list is usually culled from information you can get yourself for free.

There are many kinds of scholarship scams. The most common scam is a seminar scam, where you get a letter inviting you to a free financial aid seminar, which turns out to be little more than a high-pressure sales pitch. Sometimes, the promoters will offer to come to your home and meet with you one on one.

Scholarship scams can be hard to spot because promoters often imitate legitimate government agencies, grant-giving foundations, education lenders or scholarship matching services. They may use words like "national," "federal," "foundation," and "administration" in their titles.

The scholarship service may make statements like these: The scholarship service may make statements like these:

• GUARANTEES A SCHOLARSHIP OR "YOUR MONEY BACK": Grants or scholarships are awarded on basis of performance or qualifications. No one can "guarantee" that you'll get one;
• CLAIMS YOU CAN'T GET THIS SCHOLARSHIP INFORMATION ANYWHERE ELSE: Free scholarship information abounds-in school libraries, with federal, state, and local governments, on the Internet, and with private companies;
• WANTS A CREDIT CARD OR BANK ACCOUNT NUMBER FOR AN APPLICATION FEE OR TO HOLD SCHOLARSHIPS: Never give your credit card or bank account number over the phone. Free money shouldn't cost anything. Most legitimate companies don't charge application fees;
• SAYS THEY'LL DO ALL THE WORK: There's no way around it. You must apply for scholarships or grants yourself;
• CLAIMS THAT "YOU'VE BEEN SELECTED" OR THAT "YOU'RE A FINALIST" FOR A SCHOLARSHIP OR GRANT YOU NEVER APPLIED FOR: You've got to go after grant or scholarship money. It won't come looking for you.

If a company makes these types of claims, steer clear of them. Always check any scholarship services out with the BBB, state or county consumer protection agency and the attorney general's office first.

Precautions against Scholarship Scams

• INVESTIGATE: Carefully investigate the background of any company, especially if their offer exhibits any of the scholarship scam warning signs; (you can do this free of charge on to the BBB web site)
• GET TRUSTED, INDEPENDENT OPINIONS: Don't rely solely on a company's claims. Check them out with a high school guidance counselor, college financial aid administrator, the Better Business Bureau, or other knowledgeable group or person;
• CALL DIRECTORY ASSISTANCE: Check Directory Assistance to see if a company is listed or has an 800 number. Absence of a number should raise your suspicions;
• GET ANY OFFER IN WRITING: Never rely on verbal promises. Ask a company for printed information about cancellation and refund policies and "guarantees." If they won't provide it, watch out!
• COMPLAINTS: If you feel you've been victimized by a scholarship scam, you may file a complaint on the BBB website

This information is general in nature and is not intended as a reliability report on any company, product, or service.