On Alert! Scholarship Scams: What To Look Out For

The Federal Trade Commission warns students and their parents to be wary of fraudulent search services that promise to do all the work for you. "Bogus scholarship search services are just a variation of the 'you have won' prize-promotion scam, targeted to a particular audience-students and parents who are anxious about paying for college," said Jodie Bernstein, former director of the FTC's Bureau of Consumer Protection. "They guarantee students and their families free scholarship money...all they have to do to claim it is pay an up-front fee."

There are legitimate scholarship search services. However, a scholarship search service cannot truthfully guarantee that a student will receive a scholarship, and students almost always will fare as well or better by doing their own homework using a reliable scholarship information source, such as Peterson's Scholarship Grants & Prizes, than by wasting money and more importantly time with a search service that promises a scholarship.

The FTC warns scholarship seekers to be on alert for these seven warning signs of a scam:

1. "This scholarship is guaranteed or your money back."
   No service can guarantee that it will get you a grant or scholarship. Refund guarantees often have impossible conditions attached. Review a service's refund policies in writing before you pay a fee. Typically, fraudulent scholarship search services require that applicants show rejection letters from each of the sponsors on the list they provide. It a sponsor no longer exists, if it really does not provide scholarships, or if it has a rolling application deadline, letters of rejection are almost impossible to obtain.
   
   
2. "The scholarship service will do all the work."
   Unfortunately, nobody else can fill out the personal information forms, write the essays, and supply the references that many scholarships may require.
   
   
3. "The scholarship will cost some money."
   Be wary of any charges related to scholarship information services of individual scholarship information services or individual scholarship applications, especially in significant amounts. Some legitimate scholarship sponsors charge fees to defray their processing expenses. True scholarship sponsors, however, should distribute money, not make it from application fees. Before your send money to apply for a scholarship, investigate the sponsor.
   
   
4. "You can't get this information anywhere else."
   In addition to Peterson's scholarship directories from other publishers are available in any large bookstore, public library, or high school guidence office. Additional information on private scholarship programs can be found at www.petersons.com/finaid.
   
   
5. "You are a finalist"--in a contest you never entered, or "You have been selected by a national foundation to receive a scholarship."
   Most legitimate scholarship programs almost never seek out particular applicants. Most scholarship sponsors will only contact you in response to an inquiry. Most lack the budget and mandate to do anything more than this. If you think that there is any real possibility that you may have been selected to receive a scholarship, before you send any money investigate to make sure the sponsor or program is legitimate.
   
   
6. "The scholarship service needs your credit card or checking account number in advance."
   Never provide your credit card or bank account number over the telephone to the representative of an organization that you do not know. A legitimate need-based scholarship program will not ask for your checking account number. Get information in writing first. Note: An unscrupulous operation does not need your signature on a check. It schemes to set up situations that allow it to drain a victim's account with unauthorized withdrawal.
   
   
7. "You are invited to free seminar (or interview) with a trained financial aid consultant who will unlock the secrets of how to make yourself eligible for more financial aid."
   Sometimes these consultants offer some good tips on preparing for college, but often they are trying to get you to sign up for a long-term contract for services you don't need. Often these "consultants" are trying to sell you other financial products, such as annuities, life insurance, or other financial services that have little to do with financial aid. By doing your own research with books from Peterson's or other respected organizations, using Web, and working with your high school guidance office and the college finnancial aid office, you will get all the help you need to ensure you have done a thorough job of preparing for the financing of your college education.

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• Distance learning in the United States began in the late nineteenth century with correspondence courses, such as the on offered by Isaac Pitman in 1840 to teach his system of shorthand

• 74.9 million people enrolled in school throughout the country—from nursery school to college. That amounts to more than one-fourth of the U.S. population age 3 and older.

• $10,660 is the average tuition, room, and board (for in-state students) at the nation’s four-year public colleges and universities for an entire academic year; that is double the corresponding figure in 1990.