December and January are exciting months for high school seniors as they await college acceptance letters. But it’s an even more anxious time for parents who are trying to figure out how they’re going to pay for four years or more of ever-increasing tuition fees.
Your mailbox is probably already a drop off for postcards and letters offering help in finding a multitude of scholarships and grants to help pay for your student’s college education. You’ll probably also be invited to attend “free” dinners at nice restaurants to learn more about college scholarships.
And you’re probably thinking, “Whew! This is going to be easier than I thought it would be.”
Unfortunately, the BBB is about to burst your balloon. There is no such thing as a “free” informational dinner. No one is going to help you find scholarships or grants without charging a handsome fee. And, in these recessionary times, scam artists are out in force.
Not too long ago, the BBB in Kentucky had a phone call from a young woman who lost her life savings in an attempt to get a college loan. She was expecting a $100,000 loan and sent $20,000 to the loan operator to cover “fees.” She’ll never get that loan and she’ll never see a penny of her savings again.
This is not an isolated event. It happens nationwide with increasing frequency.
Be on the outlook for:
Advance-fee loan scams. You’ll know it’s a scam because they don’t care about your credit history, fees are unclear, the loan is offered by phone, the lender has a copy-cat or wanna-be name, and is not registered in your state.
Scholarships for profit. This scam looks like a real scholarship program but requires an application fee of between $5 and $35. Some will hand out one or two scholarships to appear legitimate, but most don’t bother.
Scholarship prize. You’re told you’ve won a college scholarship worth thousands of dollars, but you have to pay a handling fee or taxes before the money is released. If someone tells you you’ve won a prize and you didn’t enter a competition, it’s a scam.
Guaranteed scholarship search service. They promise you’ll be awarded a scholarship or they’ll refund your money. Usually they pocket your money and disappear. Or if they do send you a report of scholarships, you’ll find that it’s the same list you could get for free from a high school counselor or online.
Investment required for federal loans. Insurance companies and brokerage firms sometimes offer free financial aid seminars that are actually sales pitches for insurance, annuity and investment products. If a sales pitch implies that purchasing such a product is a prerequisite to receiving federal student aid, it violates federal regulations and state insurance laws.
“Free” seminar. You’ll get more than one postcard or letter inviting you to a free financial aid seminar or presentation. Sometimes such meetings do provide useful information, but often they are cleverly disguised sales pitches for financial and consulting services.
Where to look: Student aid information is abundant. Two good online sources are
www.FederalStudentAid.ed.org and
www.finaid.org.