High school seniors hunting for college scholarships and financial aid, beware: Scammers and scoundrels can’t wait to meet you.
Families lose money to fraudulent financial aid scams every year, according to federal officials. And with many college application deadlines just months away, this is prime time for thieves to make their pitches.
Some of the schemes claim to provide help filing federal financial aid forms, while others promise to land scholarship money for your teen. Upfront fees are attached, typically ranging from $50 to more than $1,000.
The return? Little or nothing, of course.
The U.S. Department of Education, the Justice Department and the Federal Trade Commission have been monitoring consumer complaints of financial aid fraud for more than a decade under the regulatory framework of the College Scholarship Fraud Prevention Act of 2000.
In 2011, the latest data available, the Federal Trade Commission received 501 complaints related to financial aid. Meanwhile, the Education Department said it received thousands of complaints about financial aid fraud, and the Justice Department cited prosecutions in 16 cases.
The FTC reported seeing more complaints that year involving bogus scholarship and grant search firms. It reported that fraudsters were using “an equal mix of telemarketing, direct mail and the Internet to solicit customers.”
The clear message is to be careful. But don’t let the questionable scholarship and financial aid pitches distract you from your goal of paying for college. Here are some red flags that federal authorities urge you to watch for:
Money back guarantees. Don’t believe them for one second. According to federal investigators, unscrupulous companies always have layers of conditions attached in the fine print that make it nearly impossible to get a refund.
Secret scholarships. “If a company claims to have inside knowledge of scholarship money, they’re lying,” according to a warning on the USA.gov website. In truth, most scholarship information is publicly available and a high school counselor or librarian can easily help you track it down.
Monthly or weekly fees. In essence, the thief is probably seeking authorization to debit your checking account. Ongoing fees are a sure sign of a scam.
Being told your student is an award finalist. You’re also likely to be asked to pay a fee on the front end.
Being asked for your teen’s banking information to confirm eligibility. Never give out a bank account or credit card number unless you know the organization is legitimate and you know whom you’re dealing with.
Also, steer clear of websites that offer to provide assistance for a fee (there’s that word again) in completing the Free Application for Federal Student Aid, or FAFSA. It won’t cost anything for help from the Education Department.
My advice: Why hire anyone to help you find college money when all it takes is a little time and legwork on your part? But if you need guidance, there are plenty of legitimate companies that can help you, and they don’t require upfront fees. High school counselors are a source for names.
And finally, if an offer sounds too good to be true, it most likely is.