Scholarship and Financial Aid Scams

Protect Your Family from College Payment Frauds

Scholarship and Financial Aid Scams
August 11, 2014

College is approaching, and your son or daughter has enough solicitations from universities to fill both your email inbox and snail mailbox. While your child decides where he or she wants to go to college, you can both help find additional ways to pay for it.

As you search for additional funding options, beware of the many scams for assistance in financial aid. One popular scam involves being contacted by alleged employees of the College Board requesting personal information and/or trying to sell test preparation assistance. The College Board does not call you unless you have contacted them first.

Despite all of the scams, as well as pitches from legitimate companies, you can get all the information and forms that you need for free. The place to start for all college financial aid is the Free Application for Federal Student Aid (FAFSA) form – note the word free. This form, available at the Federal Student Aid website run by the U.S. Department of Education, is used by virtually every financial aid, grant and scholarship program available.

The FAFSA website contains instructions and online assistance in filling out the form, and also contains other helpful advice and links to useful sites.

For most people, the information provided on the FAFSA website, and by counselors at their high school or colleges of interest, should be adequate to get them through the financial aid process. If you do decide to use paid assistance, take some steps to protect yourself from fraud.

  • Research The Company Thoroughly – Check out the company online and find out exactly what services they provide. You may be able to get the same services free. If they seem legitimate on a first-pass, look for online satisfaction ratings. Do not rely on sources supplied by the company – they may be paid endorsers. Check for any complaints with the Better Business Bureau (BBB), the Federal Trade Commission (FTC), and your state Department of Consumer Affairs office.

  • Ask Questions – Asking detailed questions shows that you have done your homework. Legitimate companies can answer them honestly. Less reputable ones will be evasive, especially on total costs and what they provide that is over and above the FAFSA assistance. Ongoing fees, no matter how small, are an excellent indicator of a scam.

  • Don’t Fall For Pressure – Pressure tactics are a big red flag. A legitimate company may inform you of deadlines, but anyone trying to get you to sign up before you have had a chance to investigate them is not a company you want to employ.

  • Guard Personal Information – Never give out your bank or credit card information to any company unless you are 100% sure it is legitimate.

  • Ignore “Guarantees” – Legitimate companies will never guarantee a grant or a scholarship or offer money-back guarantees. Even if they could, the scholarship could be something trivial – less than the fee that you paid to the company.

  • Ignore Unsolicited Requests – Notifications that say you have been “selected” or are a “finalist” for some aid that you never applied for are almost certainly scams.

If you do end up becoming the victim of a scam, be sure to report it and file a complaint with FAFSA, the FTC, and/or the Attorney General of your state. You may not receive any sort of compensation, but at least you can save others from falling for the same trap.

Use paid services for scholarship and grant assistance if you feel that you need to – but do yourself a favor and check out all of your free avenues of information first.

If you are interested in a personal loan, visit our curated list of top lenders .

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