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California Scholarships: Frauds and Scams

Recently a disturbing trend has emerged.  As the cost of college continues to spiral out of control, more and more parents are being targeted by con artists who are trying to fleece them by holding out the hope that they can get their student a scholarship.

In fact, last year parents lost more than $100 million to these swindlers…over $250,000 a day…and that’s just what gets reported! Most authorities estimate that the real amount is four or five times more than  what is listed. In fact, the Federal Trade Commission has had to form a special task force just to combat this, and their complaints were up an astonishing 586% from 2005 to 2006.

So, here are seven tips to help you protect yourself:

1. Beware of people who call you to tell you that you’ve won a scholarship (especially one that you didn’t apply for) and then want to ‘confirm’ your identity by getting your name, address, bank account numbers, social security information and stuff like that. All they’re trying to do is get enough information to steal your identity.

2. Watch out for high pressure. A friend with a teenage daughter told me the story of a company that called her relentlessly trying to get their checking account information so they could deposit her funds that she had ‘won’. The reality was that company was later charged with fraud for cleaning out people’s bank accounts. A real scholarship will usually notify you by mail or at an awards ceremony.

3. Also, don’t apply for any scholarship that requires you to pay an application fee. Many of these are simply lotteries. They charge thousands of parents fees that range from $10 to $249 to enter. Then, they give away ONE token scholarship to supposedly make everything legitimate, and pocket the rest.

4. Along the same lines, don’t get suckered into paying a ‘processing fee’ for a scholarship that
you’ve won. Like I mentioned in items number one and two, they’re often just trying to get your information to steal your identity.

5. Watch out for any company that ‘guarantees’ that you will win a scholarship. No one guarantee a scholarship except the organization that is offering it. So, most of these companies are simply giving you a book full of scholarships that everyone can apply for, and taking your money. By the time that you go to file a complaint, they are out of business.

6. Most scammers try to go out of their way to use official sounding names like ‘Federal’, ‘National’, ‘Education’, or ‘Foundation’ to try and fool you. And, don’t ask me why, but many of these companies tend to be headquartered in Florida.

7. Last, if you are the victim of a scholarship scam, be sure to notify the FTC immediately. They will put you in touch with their education fraud division to assist you and remember, many of these companies will be out of business if you wait to complain.

Well, hopefully you’ll follow these tips to protect yourself. In a few days, I’ll tell you the other side of the coin: how to land a
legitimate scholarship.

Hope these tips keep you safe. More in a few days…..

Filed under: AP Courses, College Financing, Consultants, Graduate School, Graduation, Major, Scholarship, Students, Tuition, Universities, , , , , , , , , , , ,

Andrew Cuomo’s “Code of Conduct” Plan: The Best Attempt To Stop “Predatory Lending” In the Student Loan Industry

If you are a parent of a college bound student or a student trying to finance your education on your own, you owe it to yourself to throughly investigate Andrew Cuomo’s campaign to expose and indict the student lending industry. This information could save you thousands of dollars and millions of headaches!

In June of 2008, Attorney General Andrew Cuomo of New York outlined and implemented a Code of Conduct plan for the 6 largest student loan lenders. Cuomo’s characterization of Student Loan lending institutions as purveyors of “predatory lending” practices is the most accurate and hard hitting characterizations of the industry by a politician yet.

Cuomo’s plan includes the following 7 provisions:

1. Ban on Financial Ties. Lenders are prohibited from giving anything of value to any college in exchange for any advantage sought by the lender. This severs any inappropriate financial arrangements between lenders and schools and specifically prohibits “revenue sharing” arrangements.

2. Ban on Payments for Preferred Lender Status. Lenders may not pay or give colleges any financial benefits whatsoever to get on a college’s preferred lender list.

3. Gift and Trip Prohibition. Lenders are prohibited from giving college employees anything of more than nominal value. This includes a prohibition on trips for financial aid officers and other college officials paid for by lenders.

4. Advisory Board Rules. Lenders are prohibited from paying college employees anything of value for serving on the advisory boards of the lenders.

5. Call-Center and Staffing Prohibition. Lenders must ensure that employees of lenders never identify themselves to students as employees of colleges. No employee of a lender may ever work in or providing staffing assistance to a college financial aid office.

6. Disclosure of Range of Rates and Defaults. Lenders must disclose to any requesting school the range of rates they charge to students at the school, the number of borrowers at each rate at the school, and the lender’s historic default rate at the school. This will ensure that schools will have the information they need to select preferred lenders who are best for students and their families.

7. Loan Resale Disclosure. Lenders shall fully and prominently disclose to students and their parents any agreements they have to sell loans to any other lender.

Look at these provisions carefully. Would you want to collaborate or become a customer of an organization that is being reprimanded for provisions 2 and 3. Essentially these are rules against kickbacks. Does it not make sense to search for an alternative to the stratospheric, exorbitant costs of college tuition loans?

What would you rather have as your plan to finance a student’s education:

High interest rate and long term loans that create financial unrest for your family for years or a financial plan that allows you to take advantage of the millions of dollars of government financial aid that goes untapped every year?

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Filed under: Admissions, Banks, College Financing, Consultants, Graduation, Major, Med School, Out of State Tuition, Parental Guidance, Public Service, Recruitment, Refinance, Scandal, Scholarship, Students, Tuition, Universities, , , , , , , , , , , ,


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