FTC Warns of Scholarship Scammers

The Federal Trade Commission has posted a well-timed update at www.ftc.gov about a disturbing increase in scholarship and financial aid scams aimed at high school seniors and their parents. As high school graduation gets closer, students and their parents shift into high gear as they search for the money to cover the high cost of college tuition and housing. The sky-high cost of education often makes these consumers easy targets for scammers.

Everybody needs money for college and it's precisely this need that some less than scrupulous companies are exploiting. Companies like these often look for victims at free seminars, where smooth-talking pitchmen promise a guaranteed scholarship in exchange for an upfront fee. According to the FTC, students and parents are often lulled into these agreements by a reassuring money-back guarantee, which in fact has so many loopholes that a refund is for all practical purposes impossible to receive. Other scammers speak of "scholarship awards" requiring a fee or even checking account access in order to confirm a student's "eligibility".

Whatever the scam, students and parents should be aware of warning signs that a scholarship offer isn't legitimate. One of the red flags is any mention of a scholarship guarantee. Any scholarship offer or "award" that requires students or parents to surrender money, or even their credit card or banking information, is almost certainly fraudulent.

The FTC does acknowledge the existence of legitimate companies that match students with real scholarship opportunities for a fee, but here, too, consumers should take care to ask the right questions. View exorbitant claims of success with the skepticism they deserve. Ask companies that make such claims for the names and addresses of people in your own neighborhood that can provide references about the quality of service and the results achieved. Finally, always get any fee-for-service offer in writing.

The pressure of finding a way to pay for an expensive college education often causes students and parents to overlook one of the best sources for student aid: the Federal government! The Department of Education pays out roughly 80 billion dollars of student aid annually in the form of grants, work-study programs and loans. The opportunities available here are simply too good to overlook and they're guaranteed to be scam-free. For more free information, visit studentaid.ed.gov, the home of Federal Student Aid on the Web!

Matt Paolini works from home as a distance learner. Visit University of Pheonix or University of Pheonix online degrees for free distance learning info.