If you’re a college student trying to avoid huge student loan debt upon graduation, then you probably already know that scholarships are an excellent way to fund your education without having to carry the burden of repayment for years to come.
It seems there is no end to the number of programs available for everyone and everything you can think of, and each year thousands of students apply for these awards to help them offset the cost of education.
Unfortunately, scholarship scams exist, and it’s important that you protect yourself from getting taken in by them. There are a few ways you can spot a scholarship scam, and knowing these tips can help keep you safe.
Common Scholarship Scams
There are several different types of scholarship scams out there, and being able to recognize one is critical. They might have different characteristics, but they all have one commonality – they want to take something from you, whether it be your hard-earned money or your personal data. If you keep this in mind, it can be simple to spot them. Let’s take a look at a few different kinds of scams.
Upfront Fee Scam
The first is when a scholarship requires a fee upfront. Some call it an application or processing fee, but if a program demands that you send them money to apply or “process” a scholarship, chances are it’s a scam. Legitimate programs don’t ask you for money upfront because a scholarship already has money it wants to give away. So if you see an offer that would be great if only you didn’t have to pay a fee, don’t bother with it.
Free Seminar Scam
Another widespread scholarship scam is the “free seminar.” You may receive an “exclusive invitation” to a free seminar on financial aid. It might sound like the perfect way to get your questions answered, but it’s not. These seminars are usually poorly disguised sales presentations for everything from investments to insurance. Sometimes they even attempt to get students to sign up for student loans with expensive terms. They may say it’s a free seminar with no obligation, but unless you want to sit through sales pitches and high-pressure techniques, you’ll want to pass on those invitations.
First-Come, First-Serve Scam
First-come, first-served scholarships are another troublesome scam. With a real scholarship program, all applicants are competing for the same prize(s), and they all have the same deadlines and requirements – in other words, a level playing field. In the scam, however, you might be told that the biggest or best prizes are only available to those who “act now!” In these cases, they often want to violate your privacy and sell your private data to marketing companies. Think about how much of your information goes into a scholarship application, and you can begin to see how valuable that data can be to a marketer or even an identity thief.
You might receive an offer in the mail announcing that you’ve “pre-qualified” or even been “awarded” a scholarship based on any number of factors like your grade point average, community service, or other standard scholarship criteria. These offers can sound amazing, but there’s just one problem. Real scholarship programs don’t need to solicit people to apply – usually they have so many applicants every year that they don’t need to do so. This means that the amazing offer in your mailbox that seems too good to be true probably is. Legitimate scholarships almost never solicit.
False Claim Offer Scam
One last scam that’s fairly popular is the false claim offer. Some scholarship scams might claim that a scholarship is guaranteed to be awarded, “or your money back.” Others might tell you that their matching service or scholarship finding service is full of scholarships you “can’t find anywhere else.” Neither of these claims are true – information on all scholarships is publicly accessible, and there is no such thing as a money back guarantee when it comes to scholarships.
How to Spot a Scam and What to Do
While it might seem simplistic, the easiest way to catch a scam before you’re victimized is to use good, old-fashioned common sense. As we mentioned above, scholarships are bombarded with applicants every year, so if a supposed program is soliciting you, it’s probably not legitimate. The same goes for those who ask for application or processing fees. Since scholarships exist for the sole purpose of giving money away, it makes no logical sense for them to be charging you fees. If you see any type of fees being charged, walk away.
As with anything else dealing with financial information, if someone is asking for your bank account or credit card information, verify who they are, who they represent, and what they need it for. You should never give your information over the phone unless you’re dealing with a reputable company that you already have dealings with (such as your phone company), and so if a scholarship says it needs your bank account or credit card information, you can be sure it’s a scam. Scholarships are almost never paid out to the student directly; they’re paid to the school itself. So there’s no reason for a scholarship program to need your information – if they ask for it, they’re trying to defraud you.
Don’t let your need to pay for school allow you to let your guard down. Verify programs before you apply; talk to officials at your school, spend time researching the organization claiming to offer it, and look for online reviews about that group or organization. Whatever you do, don’t submit any personal information – especially if they’ve been soliciting you. Get all the information together that you’ve collected and find a way to report the scam if you'd like.
How to Find Legitimate Scholarships
All this talk of scams may have you thinking that applying for scholarships isn’t worth it – but that’s not the case at all. There are thousands of real programs out there, and they aren’t looking to scam you, they want to invest in your abilities and your educational goals.
The good news is that the legitimate scholarships are easy to find with a little research, even if they aren’t sending you offers in the mail. Several sites with scholarship listings exist, such as Fastweb or CollegeNet. Almost all available scholarships are listed in these databases, so you can’t go wrong consulting one of them during your initial scholarship research. Apply to as many as you can to increase your chances of winning.
Don’t be afraid to dig into a scholarship program. If it seems too good to be true, it probably is. Stick to the well-blazed scholarship trails, and you’ll do great – and you’ll get to keep your money.