Be Wary of Financial Aid Search Companies
Almost 95 percent of all student aid comes directly from the federal and state governments or the school themselves. You or your student apply for this aid using the Free Application for Federal Student Aid (FAFSA).
Be wary of any financial aid computer search company that charges a fee to match students with sources of financial aid. There are no guarantees that the company will find any sources of financial aid that you can’t find yourself, and there’s no guarantee of receiving funds. Use some of the links to the right to explore private scholarship options.
Test whether a search company is legitimate by asking the following questions:
- If the company suggests that large amounts of aid currently are not being used, how does it document the statement?
- How many financial aid sources exist in the company’s computer file? Does the company maintain its own file of sources? Or does it use the file of some other company or service?
- Is there a minimum number of sources provided by the company? Are the listings in the form of scholarships, work, loans, or contests? Do they include federal and state programs for which the student will be considered through the regular financial aid application process?
- How often does the company update its list of aid sources? Does the company check to confirm that the source still exists?
- Can the student apply directly to the aid sources provided by the company, or must he or she be recommended for consideration by some other person or group. Are the application fees for the sources provided?
- How long will the student have to wait for the information? Will the list of aid sources be received before application deadlines?
- What characteristics are used to match students with aid sources?
- How successful have previous participants been in obtaining funds from aid sources identified by the company? Is there a list of references that can be contacted for verification?
- Will the company refund the program fee if aid sources are incorrectly matched with the student’s qualifications, if aid sources no longer exist or fail to reply to the student, or if application deadlines for aid sources already have passed when the information is received?
And remember: Even if the company answers all your questions positively, there’s no guarantee of receiving funds.
Warning Signs of a Scholarship Scam
There are no perfect indicators of a fraudulent or deceptive company. However, proceed with caution if you consider working with a company that exhibits one or more of the following warning signs:
- Listing a mail drop as a return address or operating out of a residential address.
- Excessive hype and claims of high success rates.
- Up-front money for application fees.
- Typing and spelling errors on application materials.
- No telephone number for the business.
- Suggestions of influence with scholarship sponsors.
- Time pressure to respond quickly.
- Unusual requests for personal information such as bank account, credit card, or social security numbers.
Students or families with complaints or questions about a financial aid search company should contact their local Better Business Bureau, the Federal Trade Commission, or the Attorney General’s office in the state where the company is located. If you’re a Minnesota resident, be sure you visit the Minnesota Attorney General’s Office.
If you received and replied using the postal service, contact your local Postal Inspector’s office to report possible mail fraud.