Beware of Financial Aid Scams
SPECIAL ADVERTISEMENT
Compare Federal and Private Student Loans
Search for parent and student loans.
Look on the Internet and you can find countless sources of information on obtaining college scholarships and grants. Many sites will provide information on available grant and scholarship programs through established sources, such as the United Negro College Fund, Department of Education, or other public benefit organizations. There is, however, a growing number of websites that, for a fee, claim they will provide you with information or sometimes even guaranteed placement in "secret" or "unadvertised" college scholarship programs.
Buyer, beware
College grant and scholarship information services often charge anywhere from $50 to $1000 and beyond. Before you hand over any money, you should be sure you know exactly what the service will provide, and if that information will be worth the money you're paying.
Don't pay for information you can get for free
A few services may be helpful in locating sources of financial aid for students who meet specific requirements such as ethnicity, academic achievement, religious affiliation, athletic or artistic talents, or proposed academic major or career path. But you should keep in mind that financial aid awards from these sources are limited and that not everyone who applies will get a grant or scholarship. Also keep in mind that you can often find the same information for free on the U.S. Government's Student Aid Website, other nonprofit financial aid websites, or in paper handbooks at your school, town library, or state department of education. Not all financial aid services are scams, of course, but generally, the legitimate ones are not-for-profit organizations.
Tips for identifying potential college grant and scholarship scams
Be on the alert for a possible scam...
- When a service claims that there are millions of dollars in student aid that go unclaimed every year. This figure is usually an estimate based on a broad range of national and private sources. Most of the time, however, these awards are actually available only to employees and the families of a specific company, or to the members of a specific union or organization.
- When the college scholarship service claims that you can't find this information anywhere else. Most of the time, you could have found this information for free through some independent research at your school, library, state education agency or on the internet.
- When the service asks for your credit card number or bank account information to "hold" financial aid for you. First, be very wary of any organization that asks for this information up front. Second, in general, search services will not provide any grant or scholarship award directly you, will not apply for the award on your behalf, and cannot pay out any money in the name of a financial aid provider. Never give out credit card or bank account information unless you are 100% certain that the organization you are providing it to is legitimate.
- If the college scholarship service tries to get money from you by telling you that you are a finalist in a college scholarship contest. In reality, most financial aid sources award aid within strict deadlines and with strict application criteria. Competitions or applications for scholarships and grants are generally not run like sweepstakes or raffles.
How to research a legitimate college scholarship or grant service
Before you agree to any service or pay any fee:
- Get in writing the name and contact info of a few local families you can use as references.
- Get in writing how many students have used the service and what scholarships they received as a result.
- Get in writing the service's refund or customer satisfaction policy.
- Carefully read all the fine print on any contract or document they give you.
There is a lot of money available for college grants and scholarships. Most of it comes from the U.S. Federal Government, but there is also aid available through many non-profits. Look in the right places and you can be sure you will find the help you need.
Source: "Funding Education Beyond High School, Guide to Federal Student Aid, 2008-2009," U.S. Department of Education, Federal Student Aid Research by Carlos Soto, CourseAdvisor Content Editor