Press Releases

PHEAA Warns Students and Families of Financial Aid Scams
Families should be wary of organizations charging a fee to apply for aid

Harrisburg, PA (January 23, 2008) - It’s financial aid application season for students interested in attending college in the fall. Many families, especially those unfamiliar with the financial aid process, may be scrambling to figure out how they are going to pay for college costs and where to go for help.

It’s also the season for unscrupulous organizations to contact families via email or letter with offers of help completing the Free Application for Federal Student Aid (FAFSA) for a fee, sometimes charging several hundred dollars for assistance. The FAFSA is the federal form that is used to determine eligibility for almost all forms of need-based financial aid assistance, such as the Federal Pell Grant, the Pennsylvania State Grant, many scholarships, institutional awards and low-cost federal student loans.

“Families should immediately raise a red flag if they are offered assistance completing the FAFSA for a charge,” states PHEAA Regional Director, Bruce Diefenderfer. “There are plenty of free options for help applying for financial aid. PHEAA, the federal government and the financial aid office at the schools you are interested in attending can all offer free assistance.”

PHEAA.org/fafsa walks visitors through the FAFSA completion process, offering the online FAFSA application, FAFSA Worksheet, frequently asked FAFSA questions and a schedule for Free FAFSA Completion Workshops taking place across Pennsylvania from now through March, where families can get personalized assistance in completing the FAFSA.

Additionally, Diefenderfer warns families about scholarship scams that surface at this time of year. “These scams many times guarantee scholarship money if families pay a fee for their services or that your student has already won a scholarship. Often these organizations never follow-up after receiving a check.”

Here are some tactics your students and their families should watch out for:

  1. For a fee the company will provide a list of scholarship possibilities. Students apply to the ones for which they might qualify. If no awards are received and the student attempts to get a refund, a rejection letter must be provided from EVERY source on the original list. The problem is that students seldom apply to every source, and many sources do not provide rejection letters. Therefore, the request for a refund is denied and the student is out the money.
  2. Some companies will claim that their information is not available anywhere else. The fact is that they typically use the same scholarship databases that students can research for free, including one of the largest free online scholarship databases available at PHEAA’s career and college planning website, EducationPlanner.org.
  3. Some companies will request a credit card or bank account number to “hold” financial aid dollars for the student. Students and their parents should never give out this information unless they know that the company or organization they are giving it to is legitimate.
  4. Some organizations will try to persuade students and their families to send them money by claiming that “you are a finalist in a scholarship contest.” But scholarships are not like sweepstakes – if students haven’t applied for an award, they’re not likely to be a finalist for it.
  5. Organizations will often 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.
  6. Free scholarship or “financial planning” seminars often end with a sales pitch to “act now or lose out on this opportunity.” Legitimate organizations do not use pressure tactics.