Look at Alabama Families
& New Nontraditional Programs
Education & Personal Finance
Many high school graduates seek academic scholarships
or some other type of scholarship to finance their college education.
Since funding is not in ample supply, students turn to various
places to find scholarships. Scholarship seekers have some protection
against this type of fraud.
In 2000, Congress passed the College
Scholarship Fraud Prevention Act to help federal agencies crack
down on scholarship scams. This act charged three federal agencies
with the task of establishing guidelines to provide stricter
sentencing penalties for criminal financial aid fraud. Nevertheless,
students should exercise caution when applying for scholarship
funds. Moreover, the Federal Trade Commission, the Department
of Justice, and the Department of Education submitted an annual
report to Congress about their ongoing efforts to fight scholarship
and financial aid fraud. Copies of current reports are available
online at http://www.ftc.gov.
Additionally, the FTC publishes a collection of materials to
help consumers avoid scams.
Students should consider the following
when looking for financial aid:
- If it sounds too good to be true, then
it probably is.
- If you are asked to pay money in advance
to receive money, there is the possibility that it could be a
- Rather than spending money in advance
to receive a scholarship, it would be wiser to spend more time
researching and checking the reputation of the firm or foundation
for legitimacy and integrity. Reputable scholarship foundations
do not require application fees. In other words, you should spend
no more than the amount it takes to mail a scholarship application.
- Always keep in mind that no one can
guarantee you will be awarded a scholarship.
- Lastly, if you have doubts about a scholarship
agreement, your intuition might be telling you the agreement
Every year parents and students are tricked
out of millions of dollars according to the website FinAID, The
Smart Guide to Financial Aid. Students and their families lose
more than $100 million annually and many of these scams pretend
to be affiliated with and operated by "legitimate government
agencies, grant-giving foundations, education lenders and scholarship
matching services, using official-sounding names containing words
like 'National,' 'Federal,' 'Foundation,' or 'Administration.'"
In the 2007 listing of top telemarketing
scams published by the National Consumers League (NCL), grant
frauds ranked number eight with an average loss of $3091.22 per
victim. This figure indicates a 50 percent increase from $2,036
The NCL's Internet Fraud Watch offers
consumers these tips to avoid scholarship scams:
- Find out if the funding organization
- Beware of search services that guarantee
you'll receive scholarship money.
- Be cautious about e-mails that offer
- Get all the details.
- Make sure you understand the refund
- Conduct your own scholarship search.
FinAid also offers tips to school
personnel to help protect students from scholarship fraud:
- Research the funding organization before
releasing a student's private information. The Family Educational
Rights and Privacy Act could possibly prohibit the release of
- Monitor how lists such as the dean's
or honor roll lists are being used. Test how the list is being
used by submitting fake information.
- If you are using a "third-party"
organization such as an outside publisher, make sure they do
not release private student information without written permission.
- Inform parents or guardians if you encounter
any problems. They may need to take additional steps to safeguard
Federal Trade Commission. (May
5, 2008). Federal agencies release annual report to congress
on scholarship fraud. Press Release. Retrieved October 24, 2008.
FinAid! (2008). Protecting yourself from scholarship scams. Retrieved October
FinAid! (2008). Scholarship scams. Retrieved October 24, 2008.
National Consumer League. (February 22,
2008). Con artists prey on consumer vulnerability, lurk
online, make deceptive pitch via phone, email. NCL News. Retrieved
October 24, 2008.
National Consumer League. (n.d.) Scholarship scams. Internet Fraud Tips from the National Consumer
League's Internet Fraud Watch. Retrieved October 24, 2008.
Cooperative Extension Sysem
Urban Affairs & New Nontraditional Programs
Alabama A&M University
P.O. Box 967
Normal, AL 35762
Editor: Wendi Williams
Jean Hall Dwyer
November 3, 2008
© 2008 by Alabama Cooperative Extension System.
All rights reserved in all media.