Following a considerable increase in complaints in scholarship, loan, and grant services in 2006, the Better Business Bureau (BBB) warns students and parents to watch for financial aid scams and scholarship scams.
Fraudsters often charge a fee ranging from $700 to $900 in exchange for a "guaranteed" scholarship award. One company, College Money Matters, based in Utah, charged the fee for "insider tips" and promised to get grants and help with the entire financial aid process. The company then issued grants in the form of a check and instructed recipients to deposit the check and wire the "processing fee" back to the company. When it was discovered that the check was counterfeit, the victim was forced to pay the financial institution for the money withdrawn as well as for the processing fee. By this time, the company had disconnected its phone lines and website.
The BBB offers tips on how to determine the legitimacy of a scholarship, loan, or grant service:
- Non one can ever guarantee a scholarship or grant, so if you pay money you will not always get it back.
- You easily can access scholarship information via the Internet, so don't believe promises that you won't find the information anywhere else.
- Parents and students--not a company--are the only ones who can complete federal financial aid information.
- It is never a requirement for a scholarship offer to ask for your credit card or checking account number to hold the scholarship.
- Scholarships never cost any money to receive--they are always free.
For more information, read "Make Up for College Savings Shortfalls" in Home & Family Finance Resource Center.
courtesy of cuna.org
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