Protecting Yourself Against Scholarship Scams

Unfortunately, many scholarship scams look and sound like legitimate scholarship opportunities at first glance. Individuals and organizations suspected of perpetuating scholarship scams are held accountable under the Scholarship Fraud Prevention Act of 2000 and convictions carry stiff financial penalties as well as jail time.

Even though scholarship scams are illegal, they are still very common. Scholarship scams are so widespread that the Federal Trade Commission’s website includes a page dedicated specifically on how to spot and report them.

To protect yourself, it is important to know how legitimate scholarship programs work. You will never have to pay a fee to apply for a legitimate scholarship, nor will a legitimate scholarship program request money to cover processing. There are no circumstances under which a scholarship provider will need your credit card or bank account information. Legitimate scholarship search services help you find scholarships for which you are eligible, but they cannot take care of completing applications for you.

Warning Signs of Scholarship Scams:

• Scholarship services that charge fees for information you "can't get anywhere else." There are many free lists of scholarships available so check with your school guidance counselor, library and Scholarships.com before you decide to pay someone to do the work for you.
• Paid services that come with seemingly reassuring guarantees. Check the terms closely if there's a guaranteed refund or a money back guarantee. Refund guarantees often have conditions or strings attached. Get refund policies in writing before you pay.
• Scholarship programs that require an entrance fee. Before you send money to apply for the scholarship, check it out, even if the fee seems reasonable. A lower fee is no guarantee that a scholarship service or program is legitimate. After all, free money shouldn't cost a thing.
• Promises that by using a service, you’ll have easy access to "unclaimed" scholarship money. Ignore the myth of unclaimed funds and the companies that advertise huge amounts of unclaimed money. There are unusual scholarships that go unclaimed, but usually it’s because the criteria are so esoteric that few, if any, students actually fit the bill.
• An organization that guarantees you will win a scholarship award (usually as a result of paying a fee). Don't believe a promise of guaranteed funds you'll never have to repay. No one can guarantee that you will win a college scholarship or grant. Remember: if it sounds too good to be true, it probably is.
• An organization that "sounds like" a non-profit, but has no traceable history. Don't be fooled by official-sounding names and logos. Make sure the foundation, organization or program is legitimate.
• Claims by a scholarship service to be "holding" a scholarship for you. Disregard any news that you're a finalist in any contest that requires you to pay a fee for further consideration.
• A company that claims it will "handle all your scholarship applications" for you. Resist high-pressure tactics like "We'll do all the work for you." Don't be fooled. There's no way around it, you must apply for scholarships or grants yourself.
• Requests for banking or credit card information to "process your application.” Do not give out your credit card, bank or checking account numbers to any solicitors who claim they need it for you to be eligible for either a contest or access to "exclusive" scholarship information. Get information in writing first. It may be a set-up for an unauthorized withdrawal.