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Avoiding Scholarship Scams

By College Toolkit

Given the skyrocketing college tuition costs and expenses, it is understandable that parents and students are searching for as much financial aid as possible. However, it is important that they be wary of scholarship scams. The Federal Trade Commission (FTC) put together a list of six phrases that are warning signs of a scholarship scam. They are:

  • "This scholarship will cost some money."

    Scholarships are there to provide money for students who qualify as a result of merit and/or financial need. Therefore, students should be wary when an organization requires them to pay a fee in order to apply for the scholarship. As a general rule, free money should be just that… free.

  • "The scholarship is guaranteed or your money back."

    Organizations that offer money back guarantees often make it very difficult for students to obtain a refund.

  • "I’ll need your credit or bank account number to hold this scholarship."

    Students should be very careful with financial information. They should make an effort to get things in writing before providing this information over the phone or via the internet.

  • "We’ll do all the work."

    Students must apply for scholarships and grants themselves. There may be services which can help locate relevant scholarships or provide assistance with essays, but students are responsible for completing the application.

  • "You've been selected" by a ‘national foundation’ to receive a scholarship or "You're a finalist" in a contest you never entered.

    If you do not remember entering a contest or know nothing of the "national foundation" that is offering the scholarship, the chances that this contest could be a scam are much higher. You should find out more about the organization before pursuing the scholarship.

Many legitimate companies do offer scholarship search or information services for a fee. However, they can never guarantee or promise a student that he will win any money.

What You Can Do To Protect Yourself

There are a number of things you can do to protect yourself from scholarship scams. Here are a couple of tips from the National Fraud Information Center:

  • Investigate who you are dealing with

    Find out what the organization actually does and if they offer any scholarships themselves. They may be trying to charge you to apply for a scholarship which you could apply for yourself for free. Also, they may be charging you for information you could obtain easily without paying a dime.

  • Beware of guarantees

    Search services have no control over scholarship award decisions. It is also unlikely that a foundation would offer any guarantees about the awarding of scholarships before you have applied.

  • Get information in writing

    A legitimate organization should be willing to give you any details and information in writing.

  • Understand refund policies

    Make sure that the refund conditions are attainable. Often the conditions are so difficult to meet that getting a refund is impossible.

Related Resources

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