Avoiding Scholarship Scams
Helping families recognize rip-offs
In their search for help with rising education costs, students and parents can be easy marks for scholarship scams. By keeping students and families informed and updated, you can help them tell a genuine scholarship opportunity from a scam.
Too good to be true
If it sounds too good to be true, it probably is. Here are some common signs of scams:
Exclusive scholarship info: If a service claims to have "exclusive" information — not available anywhere else — this is almost certainly a fiction. In fact, the vast majority of financial aid comes from the federal government and from colleges themselves. Those private foundations and organizations that do offer scholarships are eager to spread the word so they can attract the best candidates; they have no interest in keeping secrets.
No work — free money for college: Another red flag is a claim from any service that it will do "all the work" for applicants. Any legitimate scholarship sponsor will want to hear from the student, and that often means filling out paperwork and writing a letter or essay. There is simply no way around it.
Scholarship guaranteed: No service can guarantee students a scholarship. Money-back guarantees are a common feature of scholarship scams — the fine print reveals a list of virtually impossible stipulations in the event the student wants to reclaim the fee. Every true scholarship has some parameters — such as grade point average, professional interest, volunteer service or club affiliation. So if a service claims it can obtain funds for anyone, it's not being honest.
You've been selected: Unsolicited offers are always suspect and any notification that comes over the phone is almost sure to be a scam. If students receive information that was not requested, they should investigate before giving out any personal information or paying "processing" fees. Students should ask how the organization got their name, make follow-up phone calls to check the answer, conduct an online search on the organization and, of course, come to your office for advice.
Application fees: As a general rule, no one should have to pay more than postage to apply for a scholarship. Legitimate foundations rarely charge applicants and if they do the fee is minimal.
"Advance-fee" loans: Tell families to be wary of any offer for an unusually low-interest education loan that requires the student to pay an upfront fee before the loan will be approved or disbursed. Real lenders deduct their processing fees from the loan check before they send it to the student. Families should be especially suspicious if they don't recognize the lender's name — it's worth showing the offer to their local bank officer for a professional opinion.
"Free seminar" or candidate interview: This is often a glorified sales pitch for a financial aid or scholarship consulting service, or a pricey private student loan.
Encourage parents and students to ask questions
If an organization is legitimate, then information such as a physical address or telephone listing for the company should be available and verifiable. Warn families to particularly beware of P.O. boxes, especially in Florida and California (homes to a disproportionate number of these fraudulent organizations).
Ways to investigate companies
Your office should be the first stop for students with questions or doubts about any scholarship offer. They can also contact consumer-protection and government organizations to find out whether a company is under investigation or has been the object of complaints. (Of course, the absence of filed complaints or active investigations does not necessarily mean that the company is legitimate.) Some of these organizations are:
- The Better Business Bureau (BBB) in the city where the scholarship service is located
- The Federal Trade Commission at 877-FTC-HELP
- Your state department of consumer protection
- Your state attorney general's office
- The National Consumer League’s Fraud Center
Free scholarship searches
Scholarship information is available for free to those who take the time and effort to conduct their own search. There is no reason to ever have to pay anyone to help find scholarships.