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Beware of Scholarship Scams

by Hanne Moon

I hate being scammed – the kind of wool-pulled-over-the-eyes scam that bites into your pocketbook. I’ve never minded being one-upped in honest competition or debate. That’s just life and you roll with the punches.

But when someone takes my hard-earned money and runs with it? Let’s just say my attitude becomes something that needs praying over.

Those Little Con Artists are Everywhere

According to the Better Business Bureau, complaints about scholarship and financial aid scams increased by 60% in 2006. The Federal Trade Commission explains that these companies guarantee or promise fantastic financial aid packages, including scholarships and grants.

The only thing you have to do is cough up a little money. That should be the red flag indictor that you should run, not walk, the other way.

But It Seemed Legit…

A Utah-based company put on a nationwide series of financial aid seminars, duping parents and students out of thousands of dollars. They charged anywhere from $700 to $1,000 for filling out the students’ FAFSA (Free Application for Federal Student Aid) and guaranteeing scholarships and grants that never materialized.

Parents are finding bogus checks in their mailbox from companies stating they qualify for “free” grants. All they have to do is deposit the check and wire a processing fee back to the company.

Unfortunately, when the check bounces they have to cover the overdrafts in their bank accounts, and that “free” grant just became very expensive.

They’re Not Wearing White Hats or Black Hats

In vintage westerns you could always tell the good guys from the villains by the color of hat they wore. However, con artists refuse to make it that easy for us. Here are some one-liners that should set off warning bells:

  • “The scholarship is guaranteed or your money back.”  No one can guarantee a scholarship or grant. And the refund clause usually has so many conditions attached to it that you’ll never see a penny of your money again.
  • “This information isn’t available anywhere else.” Colleges are not covering up the financial aid they can offer. They want people to come to their school. High school counselors, college financial aid officers, libraries, the internet – all are excellent resources for information on scholarships and grants.
  • “The scholarship will cost some money.” Real scholarships don’t cost a dime.
  • “All we need is your credit card or bank account number to hold this scholarship for you.” I have to confess, I had to edit my first thoughts and comments on this statement, and then repent.

Scholarships are gifts. You’ve either received one or you haven’t. No one ever asks for money to “hold” a scholarship.

It’s Okay to be a Tattletale

There are several avenues of reporting suspected fraud or abuse concerning financial aid. It’s important that scammers be shut down and brought to justice.

  • Give a copy of all literature and correspondence to your child’s high school counselor or to the financial aid office of a local college and ask for advice.
  • Contact the Better Business Bureau and your State Attorney General’s office.
  • Contact the Department of Education’s Office of Inspector General for scams involving DOE funds. Their hotline number is 1-800-MIS-USED.
  • The Federal Trade Commission works for the consumer to stop fraudulent and unfair business practices. Contact them at 1-877-FTC-HELP.
  • Report the fraud to the National Fraud Information Center at www.fraud.org.

Is It Worth the Cost?

While there are legitimate companies that charge a fee for researching financial aid options for people, they cannot guarantee anything. Besides, it’s not going to take that much time to research scholarship options. Go to a good free internet site like the Scholarship Search from CollegeBoard or www.fastweb.com and fill out the form.  Regardless of whether you pay someone or not, your student is still going to have to fill out all the forms pertaining to applications for financial aid and write the essays. No company can do this for you.  So what’s the point of paying someone

The Bible tells us in Leviticus 19:11 (NASB) “You shall not steal, nor deal falsely, nor lie to one another.” Unfortunately, con artists have no scruples and no conscience. They are willing to destroy you to take what they won’t honestly work for.

Jesus said, “Behold, I send you out as sheep in the midst of wolves; so be shrewd as serpents and innocent as doves.” A little foresight, education, and knowledge can help avoid the fleecing these folks have in mind for us, and can prepare us to respond appropriately to these situations.