Scholarship Scams

Scholarship scams prey on students who are young, vulnerable, and perhaps not as familiar with what to look out for when investigating funding options. Scholarship scams are generated for two reasons, to obtain money or to obtain personal details. The basic rules of life apply; you should never pay money up front in order to obtain money down the track and you should never give out personal details, especially identity, bank or credit card numbers, ever!

Reiterate – never pay a fee and never give out ID.

The United Stated Federal Trade Commission (FTC) provides excellent resources and advice on how to avoid scholarship scams. They also offer information about the latest scams out there, so if you are looking and considering a particular scholarship option it pays to consult this website or phone the Commission directly.

How to Spot a Scam

The telltale lines the FTC (http://www.ftc.gov/scholarshipscams) recommends looking for are:

  • The scholarship is guaranteed or your money back
  • You can't get this information anywhere else
  • I just need your credit card or bank account number to hold this scholarship
  • We'll do all the work
  • The scholarship will cost some money
  • You've been selected
  • You are a finalist in a contest (and it’s a contest you never entered)

It makes sense to look to trusted sources when making scholarship enquiries. Excellent resources for information include your school, local government body, the library and the Department of Education.

While it does make sense to research any company or organizations you are considering dealing with, beware that these companies will not always be listed as fraudulent. In the United States there is nothing illegal about charging a fee for a service. If you do need to hire an organization to help with the paperwork involved in applying for a scholarship, make sure you read the fine print and don’t pay fees up front.

Another popular scam to avoid is the ‘seminar’. That unsolicited phone call inviting you to attend a seminar about scholarship opportunities, is very likely going to charge you for information that is available in the public domain. These organizations generally supply information services only, not scholarships.

Slick Does Not Mean Safe

The United States Better Business Bureau also warns against falling prey to slick looking operations offering scholarships. They warn that most are fraudulent despite their professional presentation. “The Better Business Bureau warns consumers to be careful. Despite their elaborate claims and professional images, many are scams.” (http://www.bbb.org/us/article/scholarship-services--are-they-all-scams-314).

There are numerous resources available to help find funding sources with are legitimate, easy to access and which do not require fees. Legitimate services don’t have elaborate schemes requiring parents and students to front up time, information or money.

Suggestions for Applying for Scholarships

Some suggestions for avoiding the pressures of applying for financial aid, and avoiding the scams are:

  • Apply early (begin in January for the next school year)
  • Complete an application for Federal Student Aid (again, do this in January)
  • Consider your options thoroughly; are you of an eligible ability (academic, artistic or sporting) that receives special scholarships? Ask the school councillor or finance office for applications for these scholarships if you may qualify
  • Are you of a particular ethnicity, gender or other minority that is being targeted for success? If so, there may be special scholarships available for you too but they will be limited. Again, get in early

If the application process seems too cumbersome, parents and students are better off seeking assistance from school guidance councillors or college finance departments than external sources. These office administrators will help you to understand and complete the forms. The scammers will try to get you to pay for something you will end up having to do for yourself anyway, because students must complete their forms at the end of the day.

Some excellent websites have been created to help parents and students search for legitimate scholarship information. These sites allow an individual to type in either a keyword search or a profile search to obtain a listing of scholarships which match skills, academic ability, study interests and demographics. The search result will suggest scholarships appropriate to your individual eligibility. It is still important to double check the authenticity of any scholarship you are referred to via the agencies listed.

If you do choose to work with a scholarship assistance company, always check out their legitimacy with the Better Business Bureau, state or county Consumer Protection Agency or the Attorney General's Office.