After a small decrease in 2000 and 2001, the number of complaints to the federal scholarship fraud awareness database increased slightly in 2003. The percentage of the total fraud complaints in the Federal Trade Commission (FTC) Consumer Sentinel database attributable to scholarship fraud, however, has continued to steadily decline since 1996.
The FTC reported that in 2003 it received 594 scholarship-related fraud complaints, up from 514 in 2002. However, 2003's 594 scholarship-related complaints made up only 0.19% of the 319,639 total fraud complaints, down from 0.21% in 2002 and 0.91% in 1996.
Those figures were released in May 2004 as part of the third annual report to Congress of the College Scholarship Fraud Prevention Act, passed in November 2000.
According to the report, "operators of financial aid scams generally promise that their services will ensure that students receive either a scholarship or increased financial aid."
Other typical claims made by financial aid scam artists include:
- claims that millions (in some cases billions) of dollars of scholarships go unclaimed every year, with promises to get the student his or her fair share;
- claims of extremely high success rates, including "testimonials" from satisfied customers; and
- claims to be endorsed or approved by a federal or state agency, a chamber of commerce, or a Better Business Bureau or its equivalent.
The Act established stricter sentencing guidelines for criminal financial aid fraud and charged the Department of Education and the FTC with implementing national awareness activities, including a scholarship fraud awareness page on the ED Web site.
The Act also required the Department of Justice, ED, and the FTC to jointly submit a yearly report to Congress on that year's incidence of financial aid fraud.
The decrease in the percentage of fraud complaints attributable to scholarship fraud "suggests that the increase in number of complaints is likely not due to more scholarship fraud activity, but rather better reporting," the report states. "For example, it is possible that an increase in the number of law enforcement agencies contributing complaints to the Consumer Sentinel database accounts for the increase."
ED's Office of the Inspector General maintains a hotline (1-800-MIS-USED) and e-mail address (oig.hotline@ed.gov) for complaints relating to fraud, waste, and abuse involving ED's funds.
For information about avoiding scholarship fraud, the FTC in 1996 established the Project Scholarscam Web page, www.ftc.gov/bcp/conline/edcams/scholarship/index.html, a comprehensive consumer education campaign.
By Elizabeth B. Guerard
NASFAA Assistant Director of Communications
Posted May 6, 2004 on
www.NASFAA.org, the Web Site of the
National Association of Student Financial Aid Administrators (NASFAA).
Copyright 2004. Redistribution to non-NASFAA institutions is prohibited
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