Scholarship Scams Cause Concern for Parents

With freshman entering college for the first time in a couple of weeks and returning students already registered for the fall term, parents and college students are facing the wind that is the massive costs associated with attending institutions of higher education in 2007. In years past, college was seen as the last major investment a parent made in a child. As well as a child's first investment in their future. With that ideal, parents and students used grants and loans to pay for the expenses associated with the pursuit of a bachelor's degree. With times changing and tuition increases nationally, parents and students have found the tasks of finding money for school an arduous and oftentimes unproductive task. So rather than scour the Internet themselves, they have turned to agencies and services like College Money Matters to help them secure the funds necessary.

Unfortunately for parents, College Money Matters is a well-known business, but not well-respected. The Utah based business is on a hit list for the Better Business Bureau as a business scam, sifting almost eight hundred dollars out of over three hundred people last year who were looking for more money for college. College Money Matters markets itself as a friend of those looking to secure funds. The premise for the scam revolves around a seminar held in a large city that is attended by the parents of high school students. The company promises to know 'insider' secrets for securing grants and loans for students if parents are willing to pay the necessary fees. By the time parents know any better, they are out of money and the opportunity because College Money Matters numbers are disconnected within days of the seminar being held.

According to the most recent study by the College Board, attending a public institution will run around $13,000 this year. That number jumps to over $30,000 to attend a private school. With a four year degree costing almost $50,000 for a public school and $120,000 from a private one, parents are forced to seek the assistance of someone who has more experience and knowledge in the area. Scholarship scams are nothing new. In fact in 1998, the Federal Trade Commission closed the doors on the National Scholarship Foundation after it was cited for having bilked 15,000 families out of over $2.8 million.

To solve the maze of financial aid, parents are encouraged to follow two streams. The first stream is using the guidance of the guidance counselor at the child's high school. If this person is solid, they will be able to help parent's navigate the murky waters of scholarships and financial aid to avoid scholarship scams similar to the College Money Matters one. The other thing parents can do is meet with people in the scholarship office at the school their child will be attending. These officials will have a preferred list of lenders to mute some of the options parents have available to them. These lenders get their names on a list based on the hopes of securing a percentage of the loan volume at a particular school and giving the school's students favorable terms in return.

With the loan market totaling over $85 billion in 2006, businesses have flooded the market as have lending schemes that create massive headaches for parents who are doing the best they can to get the money in place so their child can attend school. To ensure help for parents, the Better Business Bureau has come out with six ways to figure out if a scholarship company is a scam or legitimate business. If a parent hears that a business will guarantee a child receiving a scholarship or the parent receives their money back this is a huge red flag. No one can guarantee a scholarship for a child. When College Money Maker was making its pitch at seminars, it used the notion that it had insider information and could provide information to parents that was not available elsewhere. No information is hidden in the scholarship process. So when someone promises they know more than someone else, parents should be leery.

An interesting twist being used by scam artists is informing parents that their child has been awarded a scholarship that their child has not applied for. All scholarships require some application so be concerned when a company makes the promise it has a scholarship that you have yet to fill out paperwork toward. Also, when you have to give them your credit card information or bank account information this should be a huge red flag. A legitimate company will either remit a check to the permanent residence of the child or to the institution the child will be attending. When scholarship companies tell you that there is some cost associated with a scholarship, close the door on that opportunity. Scholarships have no costs associated with them. Lastly, if an outfit promises they will do all the work and all you have to do is sit back and wait for the scholarship offers to roll in, the Better Business Bureau advises parents to stir clear of them. Parents have a roll to play in securing funding for their children. Most scholarships require some financial information from parents including tax forms from the previous filing season. Any business telling you that you can avoid this practice should be looked at with a grain of salt and no substance.

The Better Business Bureau is concerned because of the number of scholarship scams in the market today with more parents becoming desperate to send their children to school and the amount of household money available decreasing annually. It is better to be wise and prudent than foolish and desperate. Desperation always opens the door to be taken advantage of and that is what scam artists are banking on with parents.