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Avoiding Education Grant Scams

By A.W. Berry,
Staff Writer

A grant can be a super helpful resource, but you need to make sure it's not too good to be true.

Education grants not offered directly via an authentic government agency or legitimated grant provider run the risk of being education grant scams. After the College Scholarship Fraud Protection Act of 2000 became law, it required federal institutions to run public awareness campaigns in an effort to reduce finance fraud such as education grant scams. However, despite public information pertaining to grant scams, and federal regulation of the grant process, grant fraud and scams continue to occur.


Several types of education grant scams exist. Businesses that locate grants are scams if they make false or misleading promises. Institutionally, education grant scams involve misinformation and deliberately erroneous processing of student data in an effort to increase college enrollment and maintain qualification for government grant programs. Additional types of education grant scams include scholarship fraud, phony website grant offerings, and imposters who extort grant seekers into paying for mailing or other alleged grant costs over the telephone, by mail or via email.


If an unverified education grant provider offer guarantees, or requests bank account information prior to confirming their identity there is a good chance it is an education grant scam. Grant scammers prefer not to be identified and use alternate methods of communication to remain hidden. If the grant finds the applicant rather than the other way around, it is more likely to be an active scam. If a grant facilitator of any kind does request money, be weary because grant administration and processing costs are typically accounted for in the grant itself.


Public listings positively inform grant applicants and students of known scams. TheDepartment of Education and Federal Trade Commission actively keep a record of known education grant scams. The National Association for College Admission Counseling also maintains updates on federal investigations pertaining to misuse of legitimate education grant financing processes by educational institutions. For example, in its Higher Education Fraud Alerts, the NACAC lists media reports of educational institutions that use high pressure sales tactics that involve false grant promises. Reporting new scams to the FTC also helps maintain listings and increases awareness of education grant scams.


To avoid being a victim of education grant scams build awareness of real grants by only reviewing grants available from authenticated grant providers, and verifying the grant. Government agencies and free grant locators such as Charity Navigator can be contacted to obtain information on specific grant providers. Also, consulting grant scam resources such as the Better Business Bureau is helpful in staying aware of scams. If personal financial information is requested via a website that does not begin with https, it is not secure.


Following the enactment of the College Scholarship Fraud Protection Act of 2000, the amount of financial aid scam complaints as a percentage of total fraud complaints steadily dropped to below 2/10 of a percent according to a joint study by the Department of Education, Federal Trade Commission and Justice Department. Despite this, the Federal Trade Commission's Consumer Sentinel reports the volume of scholarship and educational grant complaints approximately averages 610 per year. Relative to total fraud complaints grant fraud is a low percentage, even so, this small minority remains victims of education grant scams and justify caution toward such scams.

Last edited: October 31, 2011, 6:34 pm EST
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