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Scholarship Scams

Front of Rifle High School

In their search for help with rising tuition costs, students and parents can be easy marks for scholarship scams. By keeping students and families informed and updated, you can help them tell a genuine scholarship opportunity from a scam.
Too good to be true?

If it sounds too good to be true, it probably is.
Here are some common signs of scams.

Exclusive scholarship info! If a service claims to have "exclusive" information-not available anywhere else-this is almost certainly a fiction. In fact, the vast majority of financial aid comes from the federal government and from universities themselves. Those private foundations and organizations that do offer scholarships are eager to spread the word so they can attract the best candidates-they have no interest in keeping secrets.

No work-free money for college! Another red flag is a claim from any service that it will do "all the work" for applicants. Any legitimate scholarship sponsor will want to hear from the student herself, and that means filling out paperwork, writing a letter or essay, and so on. There is simply no way around it.

Scholarship guaranteed! No service can guarantee students a scholarship. Money-back guarantees are a common feature of scholarship scams-the fine print reveals a list of virtually impossible stipulations in the event the student wants to reclaim her money. Every true scholarship has some parameters-for example, grade point average, professional interest, volunteer service, or club affiliation. So if a service claims it can obtain funds for anyone, it's not being honest.

You've been selected! Unsolicited offers are always suspect and any notification that comes over the phone is almost sure to be a scam. If a student receives information she has not requested, she should investigate before she gives out any personal information or "processing" fees. She can ask how the organization got her name, make follow-up phone calls to check their answer, conduct an online search on the organization, and, of course, come to your office for advice.

Application fees: As a general rule, no one should have to pay more than postage to apply for a scholarship. Legitimate foundations rarely charge applicants, and if they do the fee is minimal.

"Advance-fee" loans: Tell families to be wary of any offer for an unusually low-interest educational loan that requires the student to pay an up-front fee before the loan will be approved or disbursed. Real loans will deduct their processing fees from the student's check when they send it. Families should be especially suspicious if they don't recognize the lender's name-it's worth showing the offer to their local bank officer for a professional opinion.

"Free seminar" or candidate interview: This is often a glorified sales pitch for a financial aid or scholarship consulting service, or a pricey student loan.
Encourage parents and students to ask questions

If an organization is aboveboard, then information like a physical address or telephone listing for the company should be available and verifiable. Warn families to particularly beware of P.O. boxes, especially in Florida and California (homes to a disproportionate number of these fraudulent organizations).
 

Ways to investigate companies

Your office should be the first stop for students with questions or doubts about any scholarship offer. They can also contact consumer-protection and government organizations to find out whether a company is under investigation or has been the object of complaints. (Of course, a mere absence of filed complaints or active investigations does NOT necessarily mean that the company is legitimate.) Some of these organizations are:

Free scholarship searches

Scholarship information is freely available to those who take the time and effort to conduct their own search. There is no reason to ever have to pay anyone to help find scholarships.

Start with the College Board's free online Scholarship Search . Other free searches are available at http://www.srnexpress.com/, http://www.collegeanswer.com/, and http://www.fastweb.com/.