Scholarship Scams

Don't Let Scholarship Scammers Get Your Money

Scholarship Tip:
You can find out about and apply for scholarships and financial aid for FREE, so do not pay money to get this information.

Most organizations that offer scholarships want to help you go to college and earn a degree. But beware! Unfortunately, there are also businesses and individuals that are scholarship scammers. They do not want to help you. They just want to help themselves to your money. They present themselves as scholarship matching or search services and scholarship providers.

When high school students and their parents look at the "price tag" for college, many become overwhelmed and look for financial help anywhere they can find it. This is when the scammers strike. The FinAid website reported, "Several hundred thousand students and parents are defrauded by scholarship scams. The victims of these scams lose more than $100 million annually."

You can avoid being the victim of a scholarship fraud by following one simple rule: Do not spend money to get money. The most you should pay to find out about a scholarship is the cost of a postage stamp.

Here are some tricks that scammers use.

1. " You've been selected by a 'national foundation' (or other official-sounding name) to receive a scholarship. All you need to do is send us a processing fee."
   
   Most fee-based offers are illegal and never award any scholarships. Avoid all fee-based scholarships. Note that the processing fee mentioned above may go by many names including entry fee, judging fee, application fee, handling fee, redemption fee or disbursement fee. Whatever it is called, don't pay it.
   
   A few fee-based scholarships are legitimate. These organizations request small amounts of money (two to five dollars) with an application and use most of the money they collect to award scholarships.
2. "You're a winner! Please give us your credit card or bank account number so we can hold this scholarship for you."
   
   The correct response is to simply hang up the phone. Legitimate scholarships never ask for this information.
3.  "We guarantee you a scholarship."
   
   No scholarship matching service can really guarantee that you will win a scholarship. They have no control over scholarship judges. They can guarantee that you will get the results of a scholarship search. Why pay for that? You can conduct your own free personalized search (see "Using Free Websites to Conduct Your Own Personalized Scholarship Search”).
4.  "You can't find this information anywhere else."  "Billions of dollars go unclaimed each year."  "Our database of scholarships is unique."  "You must use our service to qualify for scholarships (or financial aid)."  "We will do all the work for you, for a fee."
   
   Don't believe it. These are tactics used to get your money.

There are FINANCIAL AID SCAMS out there, too. Although this Web page focuses on scholarships, you should nonetheless be aware of these common scams.

1. The Advance Fee Loan
   You are offered an educational loan with an unbelievably low interest rate. There is just one catch -- you are required to pay a fee before you get the loan. You pay the fee. The scammers get your money. You do not get the loan.
   
   Legitimate educational loans do NOT require an up-front fee with the loan application.
2. The Free Financial Aid Seminar
   You get a letter in the mail from an organization that you have never heard of offering a free financial aid or scholarship seminar. These are often sales pitches for an insurance or investment product, an overpriced student loan, a financial aid consulting service or a scholarship matching service. You may get some useful information before the sales pitch, but why bother? High schools in Durham hold FREE programs each year about applying to college and financial aid. Check to see when they are held at your high school. Guidance counselors include valuable information with no strings or fees attached.
3. "We will fill out your FAFSA (Free Application for Federal Aid), for a fee."
   The FAFSA is a daunting form. Filling it out takes time and energy, but it is free. Paper FAFSA forms are available from your high school's guidance office. You may also fill the FAFSA out online at www.fafsa.ed.gov. Hints on filling this out are on the fafsa website and are usually discussed at high school financial aid seminars.

REMEMBER: You can find out about and apply for scholarships and financial aid for free. Do not pay money to get this information.

This table appears in “Scholarship Scam-Alert” on the FastWeb site.