Scholarship Scams Cost the Unwary

It may look like college money at your fingertips--but don’t grab too quickly.

The Federal Trade Commission is warning of rip-off schemes that promise aid after you put up cash to get it.

“If you are paying money to get a scholarship, that’s a red flag,” said Dana Lesemann, an attorney with the FTC in Washington, D.C. “Don’t trust anyone who promises to ‘do all the work’ to win you college money. A company can promise you scholarship information, but they cannot guarantee you that they will get you scholarship money.”

In the last year, the FTC has filed charges against five companies suspected of defrauding students and parents.

Recently, a U.S. district court found an Atlanta-based company, Career Assistance Planning, guilty of bilking consumers of at least $6 million. The firm sent millions of postcards nationwide, guaranteeing scholarship money for a $299 fee. If the student did not receive at least $1,000 in scholarships, the company promised to refund the fee.

More than 2,500 consumers complained that they received neither scholarship information nor refunds, FTC officials said.

Such fraud schemes may become more of a problem, investigators say, as scholarship information and databanks go online. That is not to say that all Internet aid information is questionable. After all, colleges and universities are promoting their campuses by posting scholarship programs on their Web sites. Federal financial aid forms also can be filed by the Internet.

But Lesemann, for one, is leery of subscribing to a Web site that charges fees while offering inside tracks to loans and grants.

“Don’t use it,” the FTC attorney said. “Encryption devices are questionable. You should always be very careful about giving out your credit card number. The Web is an incredibly fast-developing area. It’s just another medium for commerce and for scam artists.”

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The FTC cautions students to look for telltale lines such as “The scholarship is guaranteed or your money back” or “the scholarship will cost some money.”

Also beware of phrases in mail sweepstakes promotions such as “You’ve been selected” (by a national foundation to receive a scholarship) or “you are a finalist” in a contest you never entered.

For more information, consult:

* The FTC’s own Web site, which includes information on scholarship scams and how to avoid them. www.ftc.gov

* A comprehensive Web page by Mark Kantrowitz, author of “Guide to Scholarships and Fellowships for Math and Science Students” (Prentice Hall). It includes links to grant, scholarship and advisory services. www.finaid.org

* Information on school loans and lenders from Sallie Mae, the national student loan marketing association. www.salliemae.com

* Information from the National Assn. of Student Financial Aid Administrators on how to find money for college. www.nasfaa.org