Alert! Scholarship Scams: What They Are
Several hundred thousand students seek and find scholarships every year. Most students' families require some outside help to pay for tuition costs. Although most of this outside help, in the form of grants, scholarships, low-interest loans and work-study programs, comes either from the state and federal government or the colleges themselves, scholarships from private soures are an extremly important component of this network. There are many legit scholarship awards available from the private sector and many can be found though searching the Internet. An award from a private source can tilt the scales with respect to a student's ability to attedn a specific college during a particular year. Unfortunately, for prospective scholarship seekers, the private-aid sector is virtually without patterns or rules. It has, over many years, become a combination of individual programs, each with its own award criteria, individual programs, each with its own award criteria, timetables, application procedures, and decision-making processes. Considerable effort is required to understand and effectively benefit from private scholarships. Once of the principal reasons that Peterson's Scholarships, Grants & Prizes has been developed is to facilitate this task of grabbing the applicable prize from the complex web of scholarships.
Regrettably, the combination of an urgency to locate money, limited time, and this complex and bewildering system has created opportunities for fraud. It has been estimated that for every 10 students who receive a legitimate scholarship, one is victimized by a fraudulent scheme of scam that poses as a legitimate foundation, scholarship sponsor, or scholarship search service. Every year, an estimated 350,000 families are cheated in various scholarship scams, totalling more than $5 million.
These fraudulent businesses advertise in campus newspapers, distribute flyers, mail letters and postcards, provide toll-free phone numbers, and have Web sites. The most obvious frauds operate as scholarship search services or scholarship clearinghouses. Another segment sets up as a scholarship sponsor, pockets the money from the fees that are paid by thousands of hopeful scholarship seekers, and returns little, if anything, in proportion to the amount it collects. A few of these scams inflict great harm by gaining access to individuals' credit or checking accounts with the intent to extort funds.
A typical mode of operation is for a fraudulent firm to send out a huge mailing to college and high school students, claiming that the company has either a scholarship or a scholarship list for the students. Then companies often provide toll-free numbers. When recipients call, they are told by high-pressure telemarketers that the company has unclaimed scholarships and that for fees ranging from $10 to $400 the callers get back at least $1000 in scholarship money or the fee will be refunded. Customers who pay, if they receive anything at all, are mailed a list of sources of financial aid that are no better than, and are in many cases inferior to, what can be found in Peterson's Scholarships, Grants & Prizes or any of the other major scholarship guides available in bookstores and libraries ro on the Web. the "lucky' recipients have to apply on their own for the scholarships.
Many of the progams are contests, loans, or work-study programs rather than gift aid. Some are no longer in existence, havee expired deadlines, or set eligibility requirements that students cannot meet, Customers who seek refunds have to demonstrate that they have applied in writing to each source on the list and received a rejection letter from each of them. Frequently, even when customers can provide the almost-impossible-to-obtain proof, refunds are not given. In the worst cases, the companies ask for consumers' checking account or credit card numbers and take funds without authorization. |
