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Gerri's Top Tips: Avoiding financial aid scams

  • Story Highlights
  • Better Business Bureau says financial aid scam complaints up 60 percent
  • Expensive seminars, contests common scams
  • Legitimate scholarship offers don't require payments
  • Next Article in Living »
By Gerri Willis
CNN's Money Saver
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Gerri Willis is the host of CNN's "Open House," which airs Saturdays at 9:30 a.m. ET.

Parents beware. Financial aid scams are growing. Complaints were up 60 percent in 2006, according to the Better Business Bureau. Here's what you need to watch out for.

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No such things as free grants or guaranteed scholarships for college financial aid, Gerri Willis says.

Beware seminar hoaxes

Parents from New York to California have contacted the BBB saying they paid a Utah-based company as much as $1,000 for help finding financial aid and never heard from the company again.

Parents say their college-bound child received an e-mail from College Money Matters stating they'd "been accepted" to attend a free financial aid seminar. The seminar was essentially a sales pitch and, for a fee, the company would submit the student's Free Application for Federal Student Aid (FAFSA) form and find college scholarships and grants for the student. As you can imagine, not only did they not receive the promised help for finding grants and scholarships, but many discovered that their child's FAFSA form was never even filed.

"Free!" Grant money

The BBB has received a number of complaints from consumers who say they've received offers for "free grant money" as financial aid for debt relief or to help pay off college bills. When victims received the grant in the form of a check, they were instructed to deposit the check and then wire a smaller amount of money back to cover processing fees. It took weeks to discover the checks were fake because they looked so professional.

Red flags

Here are some phrases that should signal a hoax. "The scholarship is guaranteed or your money back." Scholarships are never guaranteed. "We will do all the work." To make sure you get the best financial aid deal, you'll need to put some effort in. There's just no way around that.

"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. "The scholarship will cost some money." Legitimate scholarship offers never require payment of any kind.

You should also be wary if there is no phone number. Ignore offers that have time pressure and remember, if you've legitimately won a scholarship, you'll be notified by mail -- not over the phone.

Where to get help

You can search for different scholarship options at Collegeboard.com. You'll be able to get a list of the requirements, the deadline and where the scholarship can be applied. You can also check out the list of scholarships and databases at finaid.org. E-mail to a friend E-mail to a friend

All About Financial Planning

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