Warning issued for offers of college aid
By Debra Erdley
Published: Monday, Dec. 24, 2012, 12:01 a.m.
Letters and emails guaranteeing scholarships might sound promising to high school seniors contemplating a mountain of college tuition next fall, but experts say the offers could be fraudulent.
Mark Kantrowitz of Cranberry, an author and financial aid expert who publishes the FinAid and FastWeb aid and scholarship websites, estimated hundreds of thousands of students fall prey to these scams every year.
The Federal Trade Commission and the Pennsylvania Higher Education Assistance Agency also advise caution, noting that consumers lose millions of dollars every year in college scholarship and loan scams by paying “application,” “registration” or “processing” fees.
“Most people who are scammed don't even realize they've been scammed. They'll just say ‘Oh, I didn't win the scholarship,' ” Kantrowitz said.
Kantrowitz said new takes on old scams are always cropping up.
“There is one scholarship that gives out 180 $1,000 scholarships, and they charge a $3 application fee. That sounds innocent enough until you hear they received over 100,000 applications. That's $300,000, and they're giving away $180,000. That's a scholarship for profit. They're just recirculating the student's money,” Kantrowitz said.
In another instance, the FTC found that a man accessed large mailing lists and sent out letters advising students they had won a scholarship.
“The letters were saying, ‘Congratulations, you won and all you have to do now is send in a $10 registration fee.'
“He'd have names like USA Biology Scholarship. And the response addresses were mail drops where he'd go around picking up the checks,” Kantrowitz said.
“If you have to pay money to get money, it's a scam. Scholarships are not about getting money; they are about giving money. If there is a processing fee or application fee, it's most likely a scam,” he said.
The FTC warns that any solicitations that include a P.O. box but no street address should raise a red flag.
Pennsylvania Higher Education Assistance Agency officials advise students and families to use Kantrowitz's free FastWeb site to search for scholarships.
Mike Giffin, owner of Ensphere College Planning Services in Upper St. Clair, said it's rare that scholarship money comes looking for students.
“You have to do your homework and remember the best money will always come from the universities,” Giffin said.
He warned against scholarship funds that request the information families provide on the Free Application for Federal Student Aid, or FAFSA, forms.
“If you give them that, you've basically given them the information you provide to apply for a credit card,” Giffin said.
Debra Erdley is a staff writer for Trib Total Media. She can be reached at 412-320-7996or email@example.com.
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