Help Your Students Avoid Scholarship Scams

With millions of students seeking ways to fund college each year, some become victims of scholarship and financial-aid scams. In a 2006 report to Congress, the U.S. Department of Justice and Department of Education, as well as the Federal Trade Commission noted that the FTC has tracked hundreds of complaints regarding financial-aid fraud over the past decade.

Financial-aid administrators can help their students guard against scholarship scams by sharing with them the following potentially phony lines in scholarship offers, as cited by the FTC:

• “The scholarship is guaranteed or your money back.” The FTC advises that no one can guarantee you a grant or scholarship.
• “You can’t get this information anywhere else.” A variety of scholarship-search resources offer assistance at no cost to you — including a database of more than 2.4 million scholarships worth more than $15 billion through College Answer.
• “I just need your credit-card or bank account number to hold this scholarship.” Never give your credit-card or bank-account number without getting information in writing first, to avoid the risk of an unauthorized withdrawal.
• “We’ll do all the work.” In reality, you must apply for scholarships or grants yourself.
• “The scholarship will cost some money.” Do not pay anyone who claims to be holding free money for you.
• “You’ve been selected by a ‘national foundation’ to receive a scholarship,” or “You’re a finalist” in a contest you never entered. Before sending money to apply for a scholarship, do research to make sure the program is legitimate.

Suggested scholarship programs
Financial-aid administrators can advise their students of the USA Funds Access to Education Scholarships^® program, which currently is accepting applications for awards for the 2007-2008 academic year. Examples of other legitimate scholarship programs are those offered through the American Indian College Fund, Hispanic Scholarship Fund and United Negro College Fund, all of which receive support from USA Funds^®.

You will need Adobe Acrobat Reader to access the 2006 federal report about scholarship fraud.

Additionally, USA Funds University notes that students and their families should be on the lookout for scams involving the filing of the Free Application for Federal Student Aid. Financial-aid administrators can share with their students a variety of options that are available to those who seek help with the FAFSA.