How to Recognize and Avoid Scholarship Scams - Scholarship America

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How to Recognize and Avoid Scholarship Scams

By Scholarship America

Preparing for higher education is one of the most stressful times in a student’s life. Between classes, standardized tests, admission deadlines, scholarship applications and financial aid forms, the junior and senior years of high school are a whirlwind. It’s all too easy to be overwhelmed—and that makes students all too vulnerable to financial aid and scholarship scams.

Avoiding Scholarship ScamsWhether they’re out to make a quick buck, or they’re aiming to harvest personal information, scammers know to take advantage of those who are stressed out, who have urgent problems or who aren’t taking time to think critically. All of those descriptors can easily apply to students on the verge of college; ironically, that means students, parents and mentors need to take some extra time to make sure they’re not falling victim.

Fortunately, there are two main rules that will help you or your student avoid nearly all scholarship scams: never pay to apply for a scholarship, and if it sounds too good to be true, it probably is. Evaluate scholarship opportunities by applying both of these rules, and you’ll steer clear of the vast majority of pitfalls.

“Processing Costs,” “Redemption Fees” and Other Red Flags

One of the most common scholarship scams is also one of the most straightforward: scholarship programs that charge a fee to submit an application. These often look fairly legitimate. After all, a $15 or $29 fee for “processing your application” doesn’t seem like so much when you could win $500, right?

But step back and look at the bigger picture: if the provider is awarding $500 in scholarships, and collecting entry fees from thousands of applicants, they’re not in it to fund education. They’re in it to make money off stressed-out high school students, and your chances of earning one of their scholarships are less than your odds on a lottery ticket. (And those are the ones that award scholarships at all—some sham providers just collect the fees and disappear.)

There are plenty of variations on the “application fee” scam. Some providers may claim they have a no-strings-attached grant or an incredibly low-interest loan to offer, as long as you pay a tax or “redemption” fee in advance. Others may use a pay-to-search model, telling you that they can match you with guaranteed scholarships through their search platform, but only if you pay for a premium search service.

In fact, there are plenty of free, comprehensive scholarship searching and matching services, like Fastweb and Cappex. They will find you legitimate, competitive scholarships that don’t charge you to apply. And there’s no such thing as a “guaranteed” scholarship—which brings us to our next section.

Too Good To Be True? Probably.

Nothing is more exciting than getting unexpected good news, whether it’s a check in your mailbox or an email that you’ve won a scholarship. Most people’s first reaction would be to deposit the check, click the accept button, and tell your Facebook friends about your good fortune.

But if you don’t read the fine print first, you could be making a costly mistake.

The second big class of scholarship scams is the “too-good-to-be-true” model: an official-sounding organization tells you about an incredible opportunity, or offers you a coveted spot at a scholarship seminar, or just sends you a check with a note of congratulations. Their messaging is designed to get your adrenaline pumping and make you act fast—but, before you do anything, take a break and look closer.

In the case of an unexpected check, it’s important to remember that if you didn’t apply for something, you’re not going to win it. Scholarship providers are not in the practice of sending funds out randomly; it’s likely the check will bounce, or they’ll ask you to send money back for “processing” or for an “accidental” overpayment. Your safest bet is to tear up the check and, if you have time, file a complaint with the Federal Trade Commission.

The same is true when it comes to other unexpected notifications. These “opportunities” are often attempts to get you divulge personal or financial information, and even clicking on links or buttons can expose your private data to scammers. If something does sound like it’s worth exploring, take the safer route: Google the name of the scholarship or organization and see what comes up. Scams are often well-identified by the FTC or Better Business Bureau, and legitimate opportunities should have a web and social presence that allows you to request more information on your own terms.

Socially Savvy Scammers

A new variation on the “too good to be true” scam is currently making the social-media rounds, demonstrating how savvy scam artists can be.

Instead of an email or an envelope, this one starts with a random friend request on Facebook, Instagram or Snapchat. Accept, and your new friend will start messaging you about a foolproof way to make some money for college: they work for a scholarship provider, and they’ve found a loophole in their system. They just need to enter you as a scholarship winner, and the two of you can split the money.

If this was real, of course, it’d be incredibly unethical, and most students would be inclined to block and report the scammer.

However, in the midst of financial aid stress, some people may be tempted—and that could cost more than money.

In some cases, the social scammer may ask you to send cash as an advance. But in most versions of this scam, they’re not directly looking for a payday—they’re phishing to find out as much about you as they can, from your name and address, to your phone number to the email you use for PayPal or Venmo. Give them enough info, and you won’t just be worrying about paying for college. You’ll be worrying about getting your identity back.

Like all scholarship scams, social-media phishing seems to work just enough for people to keep trying it. And, like all scholarship scams, you can avoid being a victim by remembering the two rules we listed above: never pay to apply for a scholarship, and if it sounds too good to be true, it probably is.

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