by Steve Thomas
Staff Writer
When does a scholarship offer sound too good to be true? Most of the time, if you believe Attorney General Dan Morales' office.
Each year, roughly 300,000 people are victimized by scholarship scams, losing more than $50 million that could have been used to pay tuition, according to a report released by the attorney general's office.
"There's fraud in every kind of business in the country; this is just one of them," said Ward Tisdale, a deputy press secretary for the attorney general's office. "We know that scholarship scams are a problem - not as big as other areas of consumer fraud, but it's a problem."
Parents and students, the report from Morales' office states, are generally taken into the scams by reports of billions of dollars of scholarship money that goes unclaimed each year. In reality, more than 96 percent of all available scholarship money is distributed annually.
Another common scam, according to the report, is the "scholarship prize," in which a student is required to pay an up-front fee.
"I sent stuff in to a scholarship service," said Bruce Gaylor, a senior economics major. "They sent me a little thing back that said to send in $40, and they would send me a packet. I threw it away. Any time you have to send money up-front, you know you're getting screwed."
Students should also be wary of a scholarship that has an unusually large application fee. This looks like a real scholarship and may actually give out money, but the amount a student pays in fees will probably far outweigh the amount given in scholarships.
Another ploy is a setup in which a student is asked for an origination or insurance fee up front. Actual student loans will charge these fees when the money is disbursed.
Students and parents should also be cautious when using a scholarship search service that guarantees students will get a scholarship or their money back. The information provided by these firms, if any, is usually out-of-date or could be easily obtained by conducting research in a local library or on the Internet.
"I had a friend who sent off to a scholarship service," said Ray Sanders, a senior political science major. "All she got was a thick packet with a list of obscure scholarships. She didn't get any scholarships, and to get her money back she had to return at least half of her scholarship rejection letters to the search service within a few weeks. I don't think she got her money back."
While scholarship scams are on the rise, the attorney general's office said few people actually report being scammed.
"We generally get three or four calls a year from parents who have lost anywhere from $60 to $100 in these scams," said Adriana Quintero, assistant director of scholarships at the University of Houston. "We find that most people who are taken don't report it. They are either too embarrassed or they just chalk it up to experience."
To keep from being scammed, according to the reports, consumers should be on the lookout for some key words or catch phrases in the advertising for these services.
Services offering exclusive access to scholarships, notification of scholarship preselection, a service that offers a money-back guarantee if subscribers do not get scholarships or services that call for a bank account or credit card to reserve a scholarship should be viewed with appropriate skepticism, the report states.
The report also provides other clues that indicate a possible scam could be in the offing. For instance, the use of official-sounding names that imply a connection to the government (like "Federal," "Division" and "Administration"), having a mail drop for a return address, not providing a telephone number or claiming that everyone is eligible are good indications that something is amiss.
If a consumer has any questions about a service, help could be as close as the local university's scholarship coordinator.
"We discourage the use of any scholarship search service," Quintero said. "We prefer that people come in and talk to us. We will point them in the right direction."