College Scholarship Scams

Just as there are myriad scams involving get-rich-quick schemes and ointments with no side effects for whatever ails you, there are also myriad scams involving the college scholarship process.

Our General Advice

There is very little information about the scholarship and financial aid process that is not already in the public domain. While there are some reputable financial aid professionals out there, there are also plenty of scam artists that you should avoid.

Congress Takes On the College Scholarship Scammers

We won't bore you with a long history lesson, but in 2000, Congress passed the College Scholarship Fraud Prevention Act. This Act established stronger sentencing requirements for criminal scholarship and financial aid fraud and required the Federal Trade Commission (FTC), Department of Justice (DOJ), and Department of Education (ED) to combat this fraud and educate the public about the college scholarship scammers through awareness campaigns.

How to Avoid the College Scholarship and Financial Aid Scams

The FTC lists the following tell-tale signs that differentiate legitimate scholarship services from the illegal scammer:

• "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 some money."

• "You've been selected by a 'national foundation' to receive a scholarship" or "You're a finalist" in a contest you never entered.

We would also like to add here that the high-pressure seminar pitches that demand immediate action also tend to be highly suspect.

Beware! College Scholarship Scams Still Exist!

In January 2003, the FTC did a "surf" of Internet sites offering college scholarship services. Of the 53 sites identified and examined, 12 -- nearly 25% -- were sent warning letters that they were in violation of the Act.

Furthermore, in August 2003, a Nevada company agreed to pay $115,000 in consumer redress for misrepresenting its ability to obtain college financial aid for its clients.

What You Can Do

If you believe you have come across an unscrupulous website that violates the College Scholarship Fraud Prevention Act of 2000, please go to www.ftc.gov or call 1-877-FTC-HELP (1-877-382-4357).

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