by Steve Rosen

If there's one sure way for parents to lose precious dollars needed for college, it's this: Biting on phony scholarship pitches.

This is the time of year when scam artists ramp up efforts to target families of high school seniors with scholarship awards, low-cost loans and other tuition incentives that offer more hype than hope.

These pitches may sound especially enticing now, given that difficult economic times have prompted more families to apply for financial aid.

Consumer complaints about scholarships and financial aid services more than doubled to 972 in 2009 from 467 in 2008, according to the Council of Better Business Bureaus.

Generally, be wary of scholarship pitches that involve application fees, scholarship matching services that guarantee success and sales pitches that are disguised as financial aid seminars, said Mark Kantrowitz, publisher of, an online consumer-oriented website.

Kantrowitz said he's been seeing more loan scams that involve advance fee payments. The lure is an unusually low-interest educational loan, with the requirement that you pay a fee to receive the funding.

Of course, after you pay, the loan never materializes. Legitimate loans, on the other hand, deduct the fees from the disbursement checks.

Here are three variations of tuition scams to watch for, according to FinAid:

-- Scholarships for profit: This type of fake program draws thousands of applications for scholarships and charges fees of $5 to $35 for processing. The promoters actually pay out a scholarship or two and take a hefty profit on the rest of the money. Your odds of winning the lottery are better.

-- Eye on the prize: In this case, you're notified that you've won a scholarship worth thousands of dollars, but you're required to pay a disbursement fee or the taxes before the prize is released.

-- The match game: Be wary of scholarship matching services that guarantee you'll win money or they'll return your funds.

Not all the financial aid sales pitches are scams. Some simply disguise the services being offered, such as invitations to "free seminars" that are really nothing more than an attempt to entice you into buying products or services. Online video workshops are a variation on this theme.

I was recently invited to attend a free (red flag No. 1) online video workshop where the promoters promised to share the "little-known secrets to getting the maximum amount" of college aid money (red flag No. 2). The only step necessary to receive these "insider strategies" (red flag No. 3) was to call a toll-free telephone number and enter my personal RSVP code. The company was never named in the mailing (red flag No.4) or in the recorded message I listened to (red flag No. 5).

Though these "free" offers may be tempting, my advice is to run the paper through the shredder. Better to save your money and spend it on college tuition than to hand it over to some sketchy service that is anything but free.

Available on

Why Boys Fail: Saving Our Sons from an Educational System That's Leaving Them Behind

Teach Like a Champion: 49 Techniques that Put Students on the Path to College

The 10 Commandments of Money: Survive and Thrive in the New Economy


Copyright © 2010 Steve Rosen. All rights reserved.


Be on the Alert for College Scholarship Scams