Federal Trade Commission
Ouch! Students Getting Stung
Trying to Find $$$ for College
money for college? Doesn't everybody? With tuition bills skyrocketing, and room and board
going through the roof, students and their families are looking for creative ways to
finance a college education. Unfortunately, in their efforts to pay the bills, many of
them are falling prey to scholarship and financial aid scams.
According to the Federal Trade
Commission, unscrupulous companies guarantee or promise scholarships, grants or fantastic
financial aid packages. Many use high pressure sales pitches at seminars where you're
required to pay immediately or risk losing out on the "opportunity."
Some unscrupulous companies
guarantee that they can get scholarships on behalf of students or award them
"scholarships" in exchange for an advance fee. Most offer a "money back
guarantee"- but attach conditions that make it impossible to get the refund. Others
provide nothing for the student's advance fee - not even a list of potential sources;
still others tell students they've been selected as "finalists" for awards that
require an up-front fee. Sometimes, these companies ask for a student's checking account
to "confirm eligibility," then debit the account without the student's consent.
Other companies quote only a relatively small "monthly" or "weekly"
fee and then ask for authorization to debit your checking account - for an undetermined
length of time.
The FTC cautions students to look
and listen for these tell-tale lines:
"The scholarship is
guaranteed or your money back."
"You can't get this
information anywhere else."
"I just need your credit card
or bank account number to hold this scholarship."
"We'll do all the work."
"The scholarship will cost
"You've been selected"
by a "national foundation" to receive a scholarship - or "You're a
finalist" in a contest you never entered.
If you attend a seminar on financial
aid or scholarships, follow these steps:
Take your time. Don't be rushed
into paying at the seminar. Avoid high-pressure sales pitches that require you to buy now
or risk losing out on the opportunity. Solid opportunities are not sold through
Investigate the organization
you're considering paying for help. Talk to a guidance counselor or financial aid advisor
before spending your money. You may be able to get the same help for free.
Be wary of "success
stories" or testimonials of extraordinary success - the seminar operation may have
paid "shills" to give glowing stories. Instead, ask for a list of at least three
local families who've used the services in the last year. Ask each if they're satisfied
with the products and services received.
Be cautious about purchasing from
seminar representatives who are reluctant to answer questions or who give evasive answers
to your questions. Legitimate business people are more than willing to give you
information about their service.
Ask how much money is charged for
the service, the services that will be performed and the company's refund policy. Get this
information in writing. Keep in mind that you may never recoup the money you give to an
unscrupulous operator, despite stated refund policies.
The FTC says many legitimate
companies advertise that they can get students access to lists of scholarships in exchange
for an advance fee. Other legitimate services charge an advance fee to compare a student's
profile with a database of scholarship opportunities and provide a list of awards for
which a student may qualify. And, there are scholarship search engines on the World Wide
Web. The difference: Legitimate companies never guarantee or promise scholarships or
This publication was produced in
cooperation with the College Parents of America. CPA is a resource, advisor and advocate
working on behalf of the millions of parents of current and future college students
throughout the United States. For more information about CPA, call toll free
1-888-256-4627 or visit CPA online at www.collegeparents.org.
You can file a complaint with the FTC by
contacting the Consumer Response Center by phone: 202-FTC-HELP (382-4357); TDD:
202-326-2502; by mail: Consumer Response Center, Federal Trade Commission, 600
Pennsylvania Ave, NW, Washington, DC 20580; or through the Internet, using the online complaint form. Although the
Commission cannot resolve individual problems for consumers, it can act against a company
if it sees a pattern of possible law violations.
The FTC publishes free brochures on many consumer
issues. For a complete list of publications,
write for Best Sellers, Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Ave,
NW, Washington, D.C. 20580; or call (202) FTC-HELP (382-4357), TDD (202) 326-2502.