PHEAA Recommends Families be Wary of Financial Aid Offers
Consumers lose millions of dollars in scholarship scams each year
Harrisburg, PA (February 14, 2011)—The Pennsylvania Higher Education Assistance Agency is reminding students and families that it's financial aid application season and they may be contacted by individuals or companies offering assistance for securing money for their college-bound student's education. For a cost, they may offer help in securing scholarship money or in completing the FAFSA® (Free Application for Federal Student Aid).
Some of these organizations are legitimate while others are not. Families should be aware that there is free assistance available in completing the FAFSA and programs that demystify the financial aid process.
"When families are pinching pennies to fund their student's higher education it doesn't make a lot of sense paying someone to do things that can be accomplished for free," said Representative William Adolph, PHEAA Board Chairman. "There are plenty of free options available to help families through the process, including PHEAA's programs, services and websites, the federal government, high school counselors and the financial aid office at the schools they are interested in attending."
Families can review a detailed explanation of the FAFSA application process, obtain a list of documents needed to complete the application, and link to the online FAFSA at www.PHEAA.org/FAFSA or fafsa.gov. Additionally, PHEAA's newly-created team of Higher Education Access Partners, in cooperation with the Pennsylvania Association of Student Financial Aid Administrators (PASFAA), offers free FAFSA Completion Events across the Commonwealth from January through April where families can receive individual guidance with questions they may have. Event schedules can be found at PHEAA.org/FAFSA.
The Federal Trade Commission warns that some unscrupulous companies "guarantee" or "promise" scholarships for students. This "guarantee" should be a warning sign. Families can avoid scholarship scams by looking for the following types of misleading sales pitches.
- For a fee, the company will provide a list of scholarship opportunities. If the student receives no awards and attempts to get a refund, they soon realize that conditions are attached to the agreement that makes it impossible to get the refund. Therefore, the request for a refund is denied and the student is out the money.
- Some companies claim that their information is not available anywhere else. However, they typically use the same scholarship databases that students can access for free on the Internet.
- Some organizations try to persuade students and their families to send them money to "hold" an award by claiming that "you are a finalist in a scholarship contest." But scholarships are typically not like sweepstakes—if students haven't applied for an award, they're not likely to be a "finalist" for it.
- Some questionable organizations have official sounding names, a fancy seal on their letterhead, and a Washington, DC mailing address. This gives unsuspecting families the impression that the organization is somehow affiliated with or endorsed by the federal government, when, in fact, no such relationship exists.
- Free scholarship or "financial planning" seminars often end with a sales pitch to "act now or lose out on this opportunity" for a fee. Legitimate organizations do not use pressure tactics.
Students interested in applying for scholarships should contact their school counselor for assistance in identifying local awards. Many community, civic and religious groups, as well as businesses, labor unions or postsecondary schools offer scholarships. Scholastic, need-based and special talent scholarships are also available.
Families are encouraged to report suspected scams by contacting the Federal Trade Commission at FTC.gov or call 1-877-FTC-HELP.
For the latest financial aid information and helpful tips, upcoming deadlines and free financial aid workshops join PHEAA on Facebook at www.facebook.com/pheaa.aid or visit pheaa.org.