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October 2010

Beware of Scholarship Scams

You may want to share this column with anyone who is a parent of a high school senior or college student. Given the high cost of attending college or a university, many parents hope their children are able to obtain scholarships to help finance some or all of their children’s education.

To begin, it’s important to note there are a number of scholarships available to the children of your local electric, grain, farm supply, or fuel cooperative. For example, I spoke at one annual meeting last year in Southwest Wisconsin where the board of directors decided to award all 27 applicants $500 scholarships. The applicants were asked to write about the benefits of belonging to, and doing business with, a cooperative over an investor-owned business. Most applicants attended the annual meeting and read their essays to the audience. I was quite impressed with their work and was very pleased to see the students rewarded for their efforts.

On another front, however, both the Federal Trade Commission and Wisconsin Bureau of Consumer Protection have received a number of complaints from parents regarding scholarship scams. The scams often arrive by telephone or by mail where one or all of the following is stated within the solicitation:
            • “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”
            • “You’re a finalist in a contest you never entered.”
            • “We apply on your behalf.”

The rule to follow is that scholarships that are too good to be true usually are. If you have to pay money to get money, it’s most likely a scam you should avoid. Some scams also operate as consulting services for financial aid. I strongly recommend that you do not waste your money on fee-based scholarship search or financial aid consulting services.

There are ways to separate the scams from the legitimate scholarship search services. First, to safely begin your scholarship search, start with your local high school or college financial aid office. Staff members of these offices are usually very knowledgeable about scholarship opportunities available to their students.

Second, there are at least several reputable online scholarship search sites that easily provide as much—or more—information than sites charging you to search for scholarships. One site is www.FastWeb.com , where you can search among more than 1.5 million scholarships worth more than $3.4 billion. You supply the site with your e-mail address. FastWeb will notify you when new awards that match your profile are added to the database.

Third, you can investigate whether the company soliciting you is a scam by searching Google with the name of the company and the word “scam” or complaint.” You may also call the Federal Student Aid Information Center at 1-800-4-FED-AID. It has a list of scams that have been the subject of either federal or state law enforcement action. You should also consider calling the Wisconsin Better Business Bureau (414/847-6000) and Wisconsin Bureau of Consumer Protection (800/422-7128) to see if any complaints have been filed against the company.

I hope your scholarship search is productive.

 


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