Scholarship Scams: What Parents & Students Need to Know
It’s sad statement of fact that a number of organizations and sites exist only to bilk students out of hundreds or thousands of dollars—usually those who need that money the most. And it’s not just your cash they’re after, but your personal information—either to sell or to use to steal your identity. When you come across an online scholarship offer, be sure to do your homework and investigate the sponsoring organization thoroughly before you give any personal information. We’ve listed some warning signs and suggested some ways to avoid getting scammed below.
Individual scholarship website scams aren’t the only entities that you need to be wary of. Not all scholarship matching services and financial aid advice services are working in your best interests either. Some will charge you a fee to regurgitate information that you can get online for free. Others will just abscond with your hard-earned money and give you nothing at all.
For those organizations not on the up-and-up, these are the most common scenarios you’ll encounter. (We’re sure there are others.)
Scams You Should Know About
Scholarships requiring an application, holding, processing, or disbursement fee—Legitimate scholarship organizations (with rare exceptions) don’t charge any fees to give a qualifying candidate money. Why would they? They’re trying to give you money.
Notification of winning a scholarship you didn’t apply for—Legitimate scholarships require that you not only apply, but meet certain eligibility requirements, and most require you to also write an essay, provide a portfolio, or otherwise meet eligibility criteria. These unsolicited scholarship offers usually come with a “disbursement fee” that you need to pay upfront before you get the scholarship, and then the scholarship never materializes, leaving you out whatever you paid for the fee. Any unsolicited scholarship awards should be suspect. A legitimate scholarship awards committee isn’t going to give money to someone unless that someone is the best candidate to receive it. If you haven’t even applied, how would they know who you? They wouldn’t.
Guaranteed scholarship or your money back—This scam comes in a variety of flavors. One will indeed get you the promised scholarship, but the award amount is far below what you actually paid in fees. Another will get you scholarships that are automatically available to any student as financial aid. Still another will give you lists of scholarships and then leave you on your own. All of them are often fraught with so many conditions that it’s impossible to get your money back if you’re not happy.
Free scholarship seminar—Many financial aid seminars use hard-sell tactics to get you to buy questionably valuable information or products. If you’ve ever been subject to the hard sell, you know just how uncomfortable it can be unless you buy now. Why put yourself through that? Legitimate scholarship sponsors and consultants aren’t going to pressure you into buying anything.
Bogus scholarship consultants or coaches—There are decent scholarship and financial aid consultants out there, but there are bad ones too, who engage in deceptive practices designed to separate you from your money. Watch out for these signs that a consultant may not be entirely honest: advice to lie about your financial information on your applications; claims of exclusive access to scholarship information; excessive hype; reluctance to answer your questions honestly or give you information about their credentials; claim to have an “in” with the scholarship sponsor. The list goes on. Trust your instincts here and ask for references.
Promotional scholarships, sweepstakes, and contests—These aren’t scams per se. Most of them award the money they claim to. But it’s like playing the scholarship lottery and buying your ticket with your personal information. Be prepared to have that information sold to marketers who will most certainly be in touch to push their product. We don’t recommend entering sweepstakes “scholarships” or contents with random drawings. Those are all about acquiring your name for marketing purposes. You’ll notice that we don’t include them in our scholarship books or on our blog.
Check out this video from The Consumer Man Show:
Beware of These Warning Signs
- No eligibility requirements
- No application work required on your part
- Requests for personal financial information or social security number
- Advance, holding, processing, or disbursement fees
- Guaranteed scholarships
- Exclusive access to scholarship information
- Assertions of unclaimed scholarship money
- Pressure to act now
- Excessive hype
- Unsolicited scholarship offers
- Winning a contest you didn’t enter
- Advertising disguised as reviews, testimonials, or success stories
- Unprofessional appearance—suspicious contact information, spelling errors, abusive correspondence, or notification of award by phone
Tips to Avoid Getting Scammed
- Never give out personal information unless you know and trust the organization you’re dealing with.
- Investigate any website offering scholarships to verify who the sponsoring organization is.
- Use caution when dealing with scholarship consultants who are reluctant to provide information on their background, services, or fees.
- Just because it looks like a government agency or official organization doesn’t mean it is. Investigate!
- Don’t pay advance fees for any information.
- Don’t pay to apply for, hold, or receive a scholarship. That includes providing your credit card number to secure your award.
- Use caution with “free seminars” and avoid the hard sell.
- Beware the “money-back guarantee.”
- Check for previous winners of the scholarship to verify that the scholarship was awarded.
- Investigate any offers originating in California or Florida. These states are home to a disproportionately high number of scholarship scams.
- If you’re suspicious about anything you come across, get another opinion from someone you trust.
- Avoid offers that involve time pressure.
- Unsolicited email can be a ploy for identity theft. For any unsolicited offers, ask how the organization got your name.
- Scammers prowl social media for contact information. Watch what personal information you give out on your social media accounts.
The bottom line—do your research. It’s vital to know who you’re dealing with before agreeing to work with them on something as important as your scholarship aspirations.