Financial Aid Scams

To alert consumers to fraudulent, deceptive, and unfair practices in the marketplace, the Federal Trade Commission (FTC) offers guidelines and services to help you avoid unscrupulous vendors of scholarship search products.

FTC advice on scholarships search "seminars"

The FTC provides information to help consumers spot, stop, and avoid scholarship scams. One of the scams that the FTC has warned consumers about is the "financial aid" or "scholarship" seminars. They suggest keeping the following in mind if you decide to attend a seminar:

  • Take your time. Don't be rushed into paying at the seminar. Avoid high-pressure sales pitches that require you to "buy now or risk losing out" on the opportunity. Solid opportunities are not sold through nerve-racking tactics.
  • Investigate the organization you're considering paying for help. Talk to a guidance counselor or financial aid advisor at the University before spending your money. You may be able to get the same help for free.
  • Be wary of "success stories" or testimonials of extraordinary success. Instead, ask for a list of at least three local families who have used the services in the last year. Ask each if they are satisfied with the products and services received.
  • Be cautious about purchasing from seminar representatives who are reluctant to answer questions or who give evasive answers to your questions. Legitimate business people are more than willing to give you information about their services.
  • Ask how much money is charged for the service, the services that will be performed, and the company's refund policy. Get this information in writing. Keep in mind that you may never recoup the money you give to an unscrupulous operator, despite stated refund policies.

BEWARE of false claims

FTC warns you to beware of companies that make any of the following claims or information requests:

  1. "The scholarship is guaranteed or your money back." No one can guarantee that they'll get you a grant or scholarship. Refund guarantees often have conditions or strings attached. Get refund policies in writing before you pay.
  2. "You can't get this information anywhere else." There are many free lists of scholarships. Check with your school or library before you decide to pay someone to do the work for you.
  3. "May I have your credit card or bank number to hold this scholarship?" Don't give out your credit card or bank account number on the phone without getting information in writing first. It may be a setup for an unauthorized withdrawal.
  4. "We'll do all the work." Don't be fooled. There's no way around it. You must apply for scholarships or grants yourself.
  5. "The scholarship will cost some money." Don't pay anyone who claims to be holding a scholarship or grant for you. Free money shouldn't cost a thing.
  6. "You've been selected by a national foundation to receive a scholarship" or, "You are a finalist" in a contest you have not entered. Before you send money to apply for a scholarship, make sure the foundation or program is legitimate.

The Federal Trade Commission has a toll-free phone number at 1-877-382-4357 and an online complaint form.