CORVALLIS - Scholarship fraud is becoming tougher, thanks to a new federal law. "The College Scholarship Fraud Prevention Act will help cut down on the number of students and their families taken in by scholarship scams," said Kate Peterson, director of Oregon State University's Office of Financial Aid.
Under the bill, which was recently signed into law by President Clinton, people convicted of scholarship fraud could be hit with jail time and fines of up to $500,000.
To help with the cost of college, many students and their families look for creative ways to finance a college education, Peterson said. "And, although there are some excellent scholarship search services, some students fall prey to scams."
Federal education officials say more than 350,000 students and their families lose more than $5 million to scholarship fraud each year. Some unscrupulous companies pose as foundations or government agencies and promise college scholarships to students for a fee. Other firms promise access to funds and personalized scholarship resources, but instead send students a form letter giving general information about how to apply for scholarships.
Prior to the passage of the Scholarship Fraud Prevention Act, the Federal Trade Commission had pursued fraudulent scholarship-search services. However, legislators say the FTC is limited to bringing civil charges against the companies, which can only bar firms from operating and force companies to compensate clients.
"This law puts some bite into efforts to reduce scholarship fraud," Peterson said.
Students looking for financial aid resources should be sure to check with school counselors, Peterson said.
"Oregon State University advisers, as well as counselors at most high schools and colleges have free lists of financial aid resources," she said.
If students elect to use scholarship search services, they should be aware that most services provide a list of possible sources of financial assistance. Search services do not, in most cases, provide any awards directly to applicants. After studying the lists provided by the search services, students usually must send a separate application to each source. Scholarship search services usually do not apply on behalf of students, nor do the services pay any additional application fees that may be required.
"Some search services mention federal student aid in their list of sources, but students should remember that they can find out about federal student aid without paying a fee to a search service," Peterson said.
Many search services offer to refund fees if students do not receive any awards. However, some services require students to provide rejection letters from every source on the list to claim a refund, she added.
Additional information on student financial aid resources is available from OSU's Office of Financial Aid at 541-737-2241, or on the World Wide Web. The U.S. Department of Education also offers financial aid information.