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When Luis Sanchez, one of eight children from a low-income Bay Area family that earned less than $35,000 annually, approached the National Student Financial Aid company, he hoped that his dream of a college education would finally become possible.

After a few seminars with the NSFA and a $1,200 fee that he paid it for the services it rendered, Sanchez began to realize that the promise of his dream was vanishing as quickly as it had appeared. He never heard back from the NSFA, let alone get a single penny out of the thousands of dollars of scholarship money it had guaranteed him.

Sanchez’s story is just one of many that the California Student Public Interest Research Group cites in a report it’s currently preparing to increase understanding among students of how fraudulent scholarship companies function.

Legislation passed by Congress in 2000 resulted in the closure of the NSFA and a refund to the Sanchez family, but the story is still an accurate reflection of an increasing trend in scholarship scams.

Fraudulent scholarship companies are making millions of dollars every year off high school students who are desperately turning to them in the wake of the increasing costs of a college education, said Aliya Haq, the campus organizer at CALPIRG’s UCLA chapter.

Students are paying bogus financial aid companies up to $100 million dollars every year in return for promises that are usually empty, Haq said.

These companies do little besides filling up students’ FAFSA forms, Haq said, charging them hundreds of dollars for the rather ironically labeled Free Application for Federal Student Aid.

“Usually nothing materializes from their promises; they are simply just scamming the students, nothing else,” Haq said. “We want to figure out how to effectively stop this, by alerting every student about these scams.”

In 2000, Congress passed the Scholarship Fraud Prevention Act to increase the penalty on companies responsible for scholarship fraud. CALPIRG was one of four groups that testified in order to bring into effect the legislation, which resulted in the closure of several companies like the NSFA and the refunding of affected families.

Nevertheless, the scams still persist, especially among lower income families who are paying the highest price in their efforts to cut education costs.

“The reality is that we are only at the beginning stages of the project,” said Merriah Fairchild, the higher education advocate for CALPIRG in Sacramento. “Our first priority is to put together a report with the many different scams that are around, to warn every student.”

Fairchild herself was the victim of a scholarship scam a few years ago. “I paid $100 to a company that claimed to find scholarships worth thousands of dollars for my education,” Fairchild said. “I never heard from them again.”

The size of CALPIRG’s task is easily understandable given the number of companies on the Internet that promise financial aid – even a simple search on Google for student scholarships yields no less than 33 million listings.

Kristin Richter, a third-year psychology and communication studies student who is a recipient of the Regents Scholarship and California grants at UCLA, identifies with the problems faced by high school students in locating scholarships for college.

“When you are a senior in high school looking for a scholarship, you are going to apply for anything you can think of,” she said.

Richter fortunately acquired her scholarships through the University of California and her high school, which banished from her mind any doubts about their legitimacy.

“But for students who search for scholarships online, it really doesn’t surprise me that they can possibly get scammed,” she said.

There are several resources available to students to help them locate legitimate scholarships and even detect fraudulent companies.

UCLA’s own Scholarship Resource Center was set up in 1996 to serve as the support mechanism that students needed in the light of widespread scams.

“In addition to helping students find scholarships, the Center is an advocacy for students to educate them about the various scams that are out there,” said Angela Deaver Campbell, the director of the center. “The center is here to support students and investigate and research scholarships for them.”

Besides the resources available to students at the center, the Federal Trade Commission has also set up guidelines to help students detect fraudulent companies, Campbell said.

Companies that claim to “guarantee” scholarships or charge “service fees” are usually fraudulent, Campbell said, as among all certified scholarship agencies search services are free and “guaranteed” scholarships are virtually non-existent.

“When they promise you a lot, they usually don’t deliver anything,” Campbell said. “And if they ever ask for your credit card information, or promise you that they will ‘do all the work,’ you should become suspicious. Arm yourself with information, and simply ask questions about everything.”

For more information on scholarships and how to detect fraudulent companies, visit the Scholarship Resource Center at 233 Covel Commons. For information regarding the FTC’s guidelines, visit www.ftc.gov.