“You are two minutes from your chance to win $10,000!” crows the ScholarshipPoints website. No pesky essay or academic or extracurricular information required.
All you need to do to get that scholarship? Fill out as many surveys as you can, collecting points that qualify you to enter a lottery for it.
That’s what Indiana student Tabitha Lymburner did. And then the drumbeat of emails started, one after another, advertising colleges and commercial products.
“Lots of emails,” said Lymburner, now 20.
For her, it was worth it; she won that lottery, and got $10,000 for college.
But not everybody wins. ScholarshipPoints and its owner, Edvisors, are among a growing number of companies that collect and then sell prospective students’ personal information by offering them a chance at scholarships, or even simply links to other people’s.
Known by the sales term “lead generators,” these companies pass along email addresses, phone numbers and home addresses to marketing partners, such as colleges and textbook companies, and students soon find themselves getting calls and emails they didn’t know to expect. Colleges and publishers pay anywhere from a couple of dollars per click to hundreds of dollars for students’ personal information.
Although her scholarship helped her afford a year at private Goshen College in Indiana — she’s since transferred to Ivy Tech Community College, also in Indiana — Lymburner mistakenly believed ScholarshipPoints was a government-run site, for instance, even though nothing on it indicates a government connection.
Edvisors declined to say how many students win awards through ScholarshipPoints. The odds of winning one of the random drawings vary depending on the number of entrants.
The Federal Trade Commission has been trying to shine a light on lead generators in all sorts of industries and has sued companies that offered homeowners low mortgage rates only to collect and sell their personal and financial information to other lenders.
The commission hasn’t taken action against the growing number of scholarship companies, said FTC attorney Brian Shull. But he said students and their families should make sure they understand who exactly is collecting their information, and who is ultimately getting it.
“Lead generators can be difficult for consumers to complain about because they don’t know who they’re dealing with,” Shull said. “That information may not get sold just to one company, but to a bunch of companies.”
An internet search for “scholarship” often directs students to these companies. Scholarships.com, Fastweb and Unigo, for example, all note in their privacy policies that users’ information may be passed along to third parties.
“People should be aware that [lead generators] are collecting that information for a reason,”
said Jill Desjean, a policy analyst with the National Association of Student Financial Aid Administrators.
For their part, lead generators say they wouldn’t be able to provide free information on scholarships without making money in some other way.
“You have to choose what you want to pay for and what you want to be annoyed by,” said Kevin Ladd, chief operating officer of 18-year-old Scholarships.com. “I experience it too, and I get it.”
The lead-generating model is better for students than previous kinds of scholarship information services, said Mark Kantrowitz, a former publisher of Edvisors who now holds the same job at scholarship- and college-matching site Cappex.
That’s because they’re free to users, he said.
“Before there were free services, there were ones that charged students, and most students didn’t win anything,” he said. Although Cappex is technically a lead generator, Kantrowitz said the company provides student information only to colleges, nearly all of them public and private nonprofit institutions, that pay to subscribe, rather than to companies looking to swamp students with emails and sales calls.
The company also sells ads on its website, he said.
Company officials at Edvisors and ScholarshipPoints said they try to avoid selling information to anyone other than legitimate higher-education providers.
“We very carefully select and screen any partners we work with,” said Anita Thomas, a senior vice president at Edvisors, who declined to discuss specifics about the company’s business model. “We shy away from those that are not in the higher-education vertical.”
By compiling scholarship offers, most of these websites do provide a service to students searching for ways to pay for an increasingly expensive college education.
Most also award their own scholarships, often based simply on random drawings rather than merit or financial need. Chegg.com, for example, offers a monthly $1,000 scholarship; one recent contest — to be answered in 600 or fewer characters — was based on an entrant’s favorite holiday tradition.
“I have yet to see a worthwhile scholarship offered by lead generators,” said Ed Mierzwinski, federal consumer program director for the U.S. Public Interest Research Group.
Although Mierzwinski suggested students talk to counselors or visit a library to find scholarships, others said lead generators can be helpful as long as students understand the tradeoffs.
“It really depends on their comfort level,” said Desjean.
She suggested students start with their high school college counselors — something tougher for low-income students with few counselors — or college financial aid offices. If a high school student has a college in mind, he or she can also ask that school for help finding scholarships.
Chambers of commerce, churches, civic organizations and parents’ employers can also be helpful places to find help, Desjean said. Students should search for scholarships related to specific interests, career goals or other areas: Children of firefighters, for example, will find awards meant for them.
Never pay a site, company or organization for a chance to win scholarships, experts said. Nor should students or parents provide sensitive information such as Social Security or credit card numbers to enter contests.
“I’m hard-pressed to know why they would be asking for that sensitive personal information, at least early in the process,” said the FTC’s Shull.
Malta-based ScholarshipOwl doesn’t do that. The company instead makes money through premium memberships it sells to students for from $10 to $69 a month that make them eligible for scholarships, reviews of application essays, and tutorials, said marketing director Ken Sandorffy, one of the company’s founders.
It still collects personal information, however.
“If you don’t give out your personal information, how can we send out their scholarship application?” Sandorffy said. “You can’t go to a bank and apply for a loan without giving them your name, right?”