Monday, March 28, 2005

Consumer alert warns of scholarship scams

By MARK HARPER
NEWS-JOURNAL EDUCATION WRITER

Almost every day, Katie Mathews-Johnson´s e-mail inbox is filled with get-money-for-college solicitations.

"I always get stupid e-mail," says the 17-year-old from South Daytona.

Some are more legitimate than others. Mathews-Johnson credits an English teacher at Father Lopez High School, where she is a senior, for helping her understand the "dos" and "don´ts" of the system.

With millions of students applying for college aid every year, some are not as prepared as Mathews-Johnson. Many fall prey to scam artists promising scholarships worth thousands for an upfront fee that may cost several hundred dollars, the Federal Trade Commission warns.

Two years ago, the FTC -- which investigates such cases -- received nearly 600 complaints related to financial aid fraud. That year, the government settled legal action against a company doing business as National Student Financial Aid, which regulators said sold aid services to at least 40,000 customers, generating more than $10 million in revenues.

The company sent students and parents letters to attend a free seminar, typically at a local hotel, where they were told that for between $795 and $1,200 they could get help finding substantially more in financial aid, according to an FTC news release.

The defendants paid $115,000 to settle the charges.

An FTC consumer alert suggests that people who attend such seminars should not be rushed into making decisions that require them to buy now or risk losing out on the opportunity.

The government also recommends parents and students investigate organizations that are seeking money for scholarship help. School guidance counselors can be helpful in determining which organizations are legitimate.

"Legitimate companies never guarantee or promise scholarships or grants," the alert states.

Mathews-Johnson said she has applied for perhaps 500 scholarships using the free Web site FastWeb.com. So far, her efforts have paid off.

Her tuition at Barry University in Miami will be covered next year, thanks to her grades and abilities in musical theater. Meanwhile, Target Corp., the retailing giant, also awarded her a $1,000 per year scholarship, which will be used for books and other expenses.

Her search continues, with a wary eye out for scams.

CAUTIONARY WORDS

The Federal Trade Commission cautions students searching for scholarships to be especially wary of the following lines:

"The scholarship is guaranteed or your money back."

"You can´t get the information anywhere else."

"I just need your credit card or bank account number to hold this scholarship."

"We´ll do all the work."

"You´ve been selected by a ´national foundation,´ to receive a scholarship;" or "You´re a finalist" in a contest you never entered.

To file a complaint or research consumer issues, visit www.ftc.gov or call toll-free (877) 382-4357.

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