The scholarship shell game Student aid: If you pay for information about financial services, you might be wasting your money.

The Education Beat

January 07, 1996|By Mike Bowler | Mike Bowler,SUN STAFF

The bulletin boards at Catonsville Community College were stripped bare after the first semester, but the fliers will be up again shortly. They'll give a number to call for a list of college scholarships there for the taking -- part of the $6.6 billion in aid said to be available nationally, much of which goes begging.

All yours for a small fee, the fliers will say.

Except that it's a myth. The $6.6 billion figure is one of those embedded errors given credence by too many respectable publications. And though there are scholarships available that students might not know about, almost all of the information provided for fees ranging from $55 to $300 by the scholarship search firms is available for free at libraries, colleges and high school counseling offices.

Moreover, any student with access to the Internet can get expert advice and information about thousands of financial aid sources simply by browsing in cyberspace.

Legitimate financial aid people are cautious about crying "fraud." There are legitimate firms with large databases and reasonable fees. (One of them, in Gaithersburg, sells a service called CASHE to Baltimore County high schools.)

"But most of them, in my experience, are of very little benefit," said Ellen Frishberg, director of student financial services at the Johns Hopkins University. "And now, with the Internet, you can obtain anything anyone else can obtain for no charge at all."

That was the message given by the Maryland Higher Education Commission State Scholarship Administration and college financial aid officers last week, "Maryland Financial Aid Week," during an hourlong program aired on Maryland Public Television.

Some scholarship services are outright scams, although few have been prosecuted, according to a number of college officials. The firms get away with their guarantees, said Mary Anne Stano, director of financial aid at Villa Julie College, because some government loans can be had by any student with a clean record.

"As long as you haven't forfeited, you can get a Stafford loan, so these firms can count that in their so-called guarantees," said Ms. Stano.

She said her office was approached by a firm that offered a $3.99 kickback for each student referred by Villa Julie who signed up for the service.

"We rejected it immediately," she said. "We can't get involved in something like that."

Anyone can become a "consultant" on college financial aid, Ms. Stano said, adding that the way to avoid being taken is to ask questions: What is the firm's track record? What does it provide, for what fee? Does it have guarantees? How many times has it had to honor a guarantee?

The money in scholarship searching has been made in franchising, according to Gregor W. Pinney, a staff writer for the Minneapolis Star Tribune, who looked into the business two years ago. One New Jersey company sold 17,000 "licenses" before it was forced out of business in 1992 amid charges by the Federal Trade Commission.

Of the six scholarship search services listed in the 1995-1996 Bell Atlantic Baltimore Yellow Pages, one number is disconnected and another is now assigned to an irate homeowner who knows nothing about college financial aid. All of the other four were answered by machines last Thursday.

It was also Mr. Pinney who tracked down the $6.6 billion figure. He traced it to an erroneous 1983 report and found it repeated numerous times by magazines, newspapers and firms in the business of selling college aid information. In fact, Mr. Pinney reported, private scholarships provide less than $2 billion a year, and "no significant scholarship money appears to go begging."

Jerome Lovick Jr., Catonsville's financial aid director who represented Maryland college and university aid officials in the MPT program, said there are "numerous sources of free information, not only in high schools and colleges but for sale at a nominal cost."

Education Beat, creating a Maryland high school senior looking for a college major in journalism, tried one such service that is free to CCC students, the College Board's "College Cost Explorer Fund Finder." The software, which includes cost and financial aid information on 3,000 U.S. colleges, came up with 29 scholarship sources for our mythical student, ranging from the Maryland State General Scholarship to the National Right to Work Committee William B. Ruggles Journalism Award.

"The parameters of the databases tend to be quite broad," said Ms. Frishberg, of Johns Hopkins. "You're not going to find the scholarship sources real close to home, like your church, fraternal organizations, your grandfather's fraternal lodge."

She recommended a free Internet service operated by Mark Kantrowitz, of Carnegie Mellon University in Pittsburgh (see box).

Mr. Kantrowitz also offers a "scholarship scam alert" at the same Internet address.

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