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Scholarship Scam Warning

Many college-bound high school graduates will be looking  for every possible way to fund steep college costs they face next fall. The federal government pays out billions of dollars each year to students who complete the FAFSA. The government made the application free because it made no sense for families to have to pay to qualify for aid. The FAFSA application can be picked up at any college financial aid office or from a high school guidance counselor office. Families can also complete it themselves for free online by going to www.fafsa.ed.gov.

Yet, a number of companies advertise that they can help students complete the FAFSA to get aid and scholarship money, for a fee. The Better Business Bureau advises students and their parents to be cautious about responding to any unsolicited offers from scholarship services that require application fees, since these organizations often cannot make good on their promises.

For advance fees ranging up to more than $1,200, some scholarship firms claim to award thousands of dollars in scholarships and grants or to match students with sources of funding, regardless of qualifications or need. Some companies even "guarantee" grants and scholarships or they refund your fees back.

In exchange for their fees, students may receive lists of possible scholarship sources. However, most of the companies do not assist students in obtaining the listed scholarships. Consumers complain that after paying the fee and supplying the necessary information, they never hear from the organization again or are unable to obtain refunds. Others allege that the information they were sent arrived too late to meet application deadlines or did not match the students' qualifications.

To avoid losing money when you can least afford it, seek out information from reputable sources. Many services advertised in these fraudulent mailings are available free of charge through high school counseling offices, college financial aid offices or public libraries.

Some schools offer online computer software programs for financial aid. Consider all available options, including federal, state and local aid programs, financial institutions' loan plans, and scholarships, fellowships, or other programs offered by colleges themselves.

Good scholarship information is available for free online from the U.S. Department of Education and at free private scholarship search databases like fastweb.com. Links to other great scholarship search tools are listed on this page.

If you are interested in using a scholarship service that requires a fee, investigate the background of any unknown company by calling the Better Business Bureau for a reliability report. Ask the company to put all details of its services and promises in writing, including the refund policy. Be suspicious of any "guaranteed" offers. Request the names and addresses of past scholarship recipients and ask those references about their experience and satisfaction with the company.