Scholarships are one of the best ways to help pay for your college education. Unlike student loans, you never have to worry about paying them back. Plus, there are thousands of scholarship opportunities available today, so there’s bound to be at least a few for which you are qualified.
Unfortunately, there are some scholarships scams out there which cheat students out of the funding they truly need to help pay for tuition. Don’t let these scams deter you from applying for scholarship money. Instead, learn more about what types of scholarship scams are out there and how you can detect them before it’s too late.
Types Of Scholarship Scams
When it comes to scholarships, there are numerous types of scams that have popped up over the years. The following are some of the most common scholarship scams that you may encounter:
- No Funds Awarded: This is a common scam where a scholarship is never actually awarded.
- Disbursement Fees For Funds: With this scam, a student is told they need to pay disbursement fees in order to collect their scholarship funds. However, this is generally not required for legitimate scholarships.
- No-Application Prizes: If you’ve been informed that you have won a scholarship, but you never sent in an application, it is likely a scam.
- Guaranteed Scholarship Searches: Some services claim that, if you pay a fee, they’ll guarantee that you’ll win a scholarship.
The common thread with these scams is how the scammers profit from them. Generally, money is collected through application fees, disbursement fees or other fictional costs that are pocketed by the individuals running the scams. In some cases, your personal information is what they are after (whether it’s credit card numbers, social security numbers, etc.) so that they can commit identity theft.
Scholarship Scam Warning Signs
There are several things you need to watch out for when searching for scholarship programs to which you can apply. Here are some of the signs that a scholarship may be a scam:
- You have to pay money to get money – whether through application fees, disbursement fees, processing fees or other costs.
- You have to pay money just to find out about the scholarship, such as how to apply.
- You are guaranteed to win a scholarship – even if they say “or your money back.”
- Everyone is eligible – legitimate scholarships always have some sort of restrictions or guidelines.
- A service offers to apply for scholarships on your behalf – you should always write your own essays, get your own letters of recommendation, etc.
- There is an unusual request for personal information – such as asking for your bank account numbers, credit card numbers or social security number.
- There is no telephone number, website or email address you can use to contact the scholarship program with inquiries.
- The program has a knock-off name or faux-official name – some scams make up a name that sounds like a government agency or is similar to the name of a real organization in order to create a false sense of security.
- The program uses the word “Fund” or “Foundation” in their name or claims that they are a non-profit to seem legitimate.
- The program can’t prove that they are actually giving out awards.
- The application materials or website contain typing or spelling errors or lack an overall professional appearance.
- The program notifies winner by phone rather than by mail.
- The program makes unsolicited offers – most scholarship programs only respond to inquiries and won’t contact you out of the blue.
In general, if anything about the scholarship opportunity makes you suspicious, there is a chance that it could be a scam. While they aren’t a dead giveaway for a scam, these warning signs are definitely an indicator that a scholarship opportunity requires more research before you consider applying.
Protecting Yourself From Scholarship Scams
Not sure if a scholarship is a scam or not? Here are some things you can do to help avoid getting caught in a scholarship scam:
- Ask a high school guidance counselor, financial aid administrator or other trusted source for their opinion.
- Call Directory Assistance to find out if the company has a listing.
- Never give out personal information that could lead to identity theft.
- Don’t respond to unsolicited offers.
- Be extremely wary of any scholarship that requires upfront fees.
- Keep copies of your correspondence with the scholarship program.
- Only apply for scholarships that you can confirm are legitimate through research and inquiries.
How To Report A Scholarship Scam
If you do find out about a scam, even if you didn’t apply for the scholarship yourself, it’s important to report it so you can help protect yourself and other students. Before you report a scam, collect all the correspondence and information from the company and write down notes about your experience and the details of your complaint. Then, contact one or more of the following organizations to make sure that your report is received:
- National Fraud Information Center (NFIC)
- Federal Trade Commission (FTC)
- State Attorney General’s Office
- Better Business Bureau
- U.S. Department of Education – contact the Office of the Inspector General
- United States Postal Service (USPS) – for instances of mail fraud
Scholarship scams need to be taken seriously. In addition to taking away money from students, they can also lead to identity theft with devastating personal consequences. Always do your research when applying for any scholarship and be sure to report any scams that you encounter in your search for scholarship funds.