BBB warns students of scholarship scams

Herb Weisbaum • Profile • E-mail

College costs are staggering. According to the College Board, the average annual cost (tuition, fees, room, and board) of attending a four-year public college is nearly $13,000. For private schools, the average cost is more than $30,000.

This is the time of year when families scramble to assemble the funds to pay for the fall semester. “People are desperate for money,” says Jim Boyle, president of College Parents of America. “They’re looking for help wherever they can find it, which makes them especially vulnerable to scholarship scams.”

The National Council of Better Business Bureaus warns college-bound students and their parents to be wary of financial aid fraud. “There are companies out there that will promise big bucks for college,” says spokesman Steve Cox, “but ultimately they take your money and leave you with nothing.”

The Better Business Bureau says consumer complaints against scholarship, loan, and grant services jumped 60 percent last year. Many of those complaints deal with a company that often uses the name College Money Matters.

“We know that there are at least hundreds of victims all across the country,” says Jane Driggs, CEO of the BBB in Utah. "Most paid $795 or more,” she says, “and got absolutely nothing in return.”

How to Avoid Scholarship Scams The BBB recommends that you be suspicious if a representative tells you: "The scholarship is guaranteed or your money back." In reality no one can guarantee that they will get you a grant or scholarship. And the refund guarantees that are offered usually have so many conditions or strings attached that it is almost impossible for consumers to get their money back. "You cannot get this information anywhere else." Actually, scholarship information is widely available in books, from libraries and financial aid offices and on the Internet, if you are willing to search for it. "We will do all the work." Only parents and students can really determine and provide the financial information needed to complete the forms. "You have been selected by a national foundation to receive a scholarship." If you have not entered a competition sponsored by the foundation, this claim is highly unlikely. "May I have your credit card or bank account number to hold this scholarship?" This is never a requirement for a legitimate scholarship offer. "The scholarship will cost some money." Legitimate scholarship offers never require payment of any kind. Source: National Council of Better Business Bureaus

Because the last known address for College Money Matters was in Utah, the BBB office there is handling most of the complaints. But Driggs says the company does not respond anymore.

I tried, unsuccessfully to reach the company for a comment. The e-mails all bounced back and most of the phone numbers were either disconnected, or constantly busy. I did leave a message on one answering machine, but my call was never returned.

Last year, Michelle Black received a postcard from College Money Matters when her daughter, Korrina, was a high school sophomore. The seminar was being held at a nice hotel in downtown Houston, so she figured, it had to be on the up-and-up.

Black says the company made some promises that were mighty appealing. “They would help us get grants and help with the whole application process,” she told me. “They knew things that most people didn’t know about and they could do for us things we couldn’t do for ourselves.”

The company wanted $900 for its “insider” tips. Black was able to put $100 down and agreed to pay off the rest via automatic billing to her checking account.

Six days after the seminar, Black called College Money Matters to ask a question. The phone numbers she had been given were all disconnected and the company’s Web site was down.

Realizing she’d been scammed, Black went to her bank and closed her checking account. That’s when she started getting phone calls threatening to send her to collection. “It got real nasty,” she told me. After many heated arguments, the company finally backed down and stopped calling.

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