Financial information

Beware of scams when looking for scholarships

As the June 30 federal FAFSA deadline has arrived, many students are looking for and applying for grants and scholarships to fund their college education. With average tuition around $22,000 at 4-year institutions, according to the National Center for Education Statistics, paying for a college degree is a tough hurdle for prospective students. A challenge made more difficult by the presence of scam artists looking to take advantage of students and parents looking for financial aid opportunities.

The Better Business Bureau receives numerous reports of scholarship scams each year. Several reports have already been submitted to BBB Scam Tracker in 2022, detailing consumer interactions with unethical companies claiming to provide financial advice to students.

For students who are struggling to pay their tuition fees, a sudden scholarship or scholarship offer can feel like a dream come true. But it could be bait for a scam. This scam hooks victims with the promise of money, but the initial “fee” never actually materializes into these much needed funds. In a more recent twist, these scammers claim to help with student loan forgiveness.

Better Business Bureau (BBB) ​​recommends caution when dealing with companies that offer assistance in finding financial aid opportunities. Students and their families should beware of websites, seminars, or other programs that promise to find scholarships, grants, or financial aid programs for a fee.

How scams work:

The scammers usually pretend to represent the government, a university or a non-profit organization. The details vary, but the downside is the same. The scammer will pose as a financial aid representative using words like “National” and “Federal” to sound more official. They pretend that you have won a scholarship or grant (without ever applying) and ask for the payment of a one-time “processing fee”. In another version, the scammer tricks you into applying for a “guaranteed” scholarship or grant. However, there are fees to apply. Once the fees are paid, time passes and the money is never sent. When trying to contact a representative, one quickly discovers that the company has set so many conditions that it is almost impossible to receive a refund.

In yet another variation, a check arrives for the purse and instructions are included to return payment of taxes or fees. The check turns out to be fake, and you lose all the money sent.

A consumer recently reported this version: “The company claims to be around for 14 years, but the website has been around for two years… The financial aid workshops are an introductory meeting where they try to charge you $2,000 for a help with university admissions. , but it turns out that the help is limited to exchanging SMS with an unknown person. The fine print in the contract states that the person you are texting is not a professional and has no expertise in college admissions or financial aid.

Due to the sensitive personal and financial information provided for scholarship and grant applications, it is important to exercise caution when choosing an application. Of the 2.47 million full-time students enrolled in post-secondary institutions in the 2018-2019 school year, 84% received financial aid in the form of student loans or federal, state, local or institutional grants . On average, students received just over $5,000 in federal grants, such as FAFSA, and over $11,000 in institutional grants. Although the amount awarded varies depending on the institution (public or private or two-year or four-year), applying for grants and scholarships is a great way to ease the financial burden of attending a middle School.

Legit companies help students find help with certain results. However, students and parents can usually find the same and other rewards on their own by searching online. Future college financial aid offices can also help, especially if it is a college the student is seriously considering attending.

Scholarship applications are usually free.

More information is available online at studentaid.gov for different financial aid options. Even if you don’t think you qualify for financial aid, review the options on the Federal Student Aid website, as many colleges and universities use it for non-need-based scholarships.

To protect students and parents seeking financial aid opportunities from scholarship scams, the Better Business Bureau recommends following these guidelines:

  • Beware of unsolicited offers. As a general rule, it is impossible to win a scholarship or grant that has not been applied for. Ask how the organization got your name and contact information, then check with the source outside of the email, phone number or website they used to contact you.
  • Take your time. Avoid being rushed or pressured into paying for help at a seminar. Be careful if a representative urges you to buy now to avoid losing an opportunity.
  • Ask lots of questions. Be cautious if a company is reluctant to answer questions about the service or process. If the company or seminary representative is evasive, walk away.
  • Ask your guidance counselor or a college financial aid office if they have experience with the business.
  • Beware of glowing achievements touted on websites or at seminars. Instead, ask for the names of families in your community who have used the service in the past year. Talk to them and find out their experience with the company.
  • Find out about fees associated with a search for professional financial assistance and whether the company offers refunds. Get the information in writing, but be aware that dishonest companies may refuse to refund despite stated policies.
  • Be aware that a check can bounce even after the bank authorizes the withdrawal of cash from the deposit. Check processing is a confusing business, and so is terminology. Even if a bank representative says a check has “cleared,” there’s no guarantee it won’t be detected as fake weeks later. One thing the account holder can be sure of is that they will be responsible for all funds taken from the amount.

Source: BBB.org, BBB St. Louis, BBB Heart of Texas

To report a scam, go to the BBB Scam Tracker. To find reputable companies, go to https://www.bbb.org.