Latest Update: March 10, 2017
Scholarships, grants, and bursaries are some of the best ways to get money for school. It can be the money you need to make sure you can afford your education. Best of all, they don’t need to be paid back, allowing you to reduce your debt load.
However, some less scrupulous companies and organizations are scamming the less fortunate people who need scholarships in order to go to school. They take people’s money and use it toward their own ends, and many times, they do not offer any scholarships or awards.
These scams are not so commonplace that you should be worried. Most scholarships are, in fact, completely legit and not scams. Many scholarships are easily found on the Internet, others are only found in catalogues or known through word of mouth.
Scholarships scams often propagate through misinformation. They prey on those who simply don’t know better, or don’t have a lot of resources to attend school.
However, it’s not just misinformation that gets people on board with the scams. Student debt is at an all-time high, and many high schoolers (and their parents) want to go to college without drowning themselves in debt. For many people, scholarships are the only hope of doing so, and these fraudsters are using that hope in order to trick people into handing over their money.
So please, read this article, and remember to keep your head about you when looking for scholarships!
How Do Scholarship Scams Work?
We want to give you the lowdown on what makes a scholarship scam work. Generally, a scam reaches out to as many people as possible and asks them to apply. They will then request some sort of fee, maybe an application fee or some sort of processing cost. After a while, they then ‘select’ their winner… when there is no winner at all.
Some scholarship scams target kids who are unlikely to go to college. They’ll tell them that they ‘qualified’ and were selected based ‘on their merit’ when, in reality, they did not select them for their merit but instead they went through a database of high school aged kids. They often pay money to buy lists of kids getting ready to graduate. Once they get the list, they spam as many people’s emails and flood people’s mailboxes in order to get as many applicants as possible.
Others are “scholarship search services” that will charge you to find a scholarship on their website. Or, they will request that you pay them a ‘finder’s fee’ so they can search for scholarships that are relevant to you. They might be legit, but there’s no reason to have to pay anyone to find a scholarship for you.
Another popular service is a scholarship application preparation service. They promise that they will create for you a winning application to one of many competitive awards. Services like these should be avoided like the plague, and we’ll explain why later.
Scholarship scams are run for profit, but may be disguised as not-for-profit organizations. They might have a name like “Jane Doe Fund for Students in Need”, posing as a real scholarship fund. Don’t be fooled: follow our tips for detecting a scam and you will remain safe.
Fake scholarships are exactly as they sound. They pose as scholarships by putting up a website and seeing if they can get signups. Some fake scholarships can pull this off very well, posing as a foundation and using common design themes that real scholarship websites will use.
These scholarships are aimed at one thing: making money. There are many ways that they do so. Here are the most common ways:
- They charge an up-front application or processing fee with your application. Fake scholarships that do this will make money on the front end.
- They require a purchase of something in order to apply. This is another way they can make money on the front end. No real scholarships require purchase!
- They have you travel to a seminar in order to be eligible. Some real scholarships DO hold seminars, but they are never mandatory. Said seminars tend to be pitches for something else, so beware!
- They ask for bank or credit card info in order to ‘reserve’ your scholarship. Do not give them your info! They will charge your cards, potentially draining them.
- They charge nothing, but instead collect your personal information and either (1) put you on a mailing list or (2) sell your info to identity thieves. Much harder to determine, but by doing your research you can find out if they’re doing this.
To prevent falling victim to one of these frauds, search “(name of scholarship) scam” in Google to see whether or not you’re applying to something legit.
Scholarship Search Services
This is a common scam that is often found on the Internet. How the scam works is that the website will convince you that you need to sign up for the service in order to have the best chance at finding a scholarship that is right for you.
Key features of this kind of scam:
- They cost money. Whether it’s a monthly access fee, or it’s a one-time finder’s fee, there should NEVER be a cost to applying or looking for scholarships. Period.
- They promise information that cannot be found anywhere else. All information on scholarships can be found publicly, whether on the Internet, at your library, at your town hall, or at your school.
- They use high-pressure sales tactics on their webpage.
- They use “success stories”, of which most of them are fake. If you see someone who “swears by the service” and then they make you pay, it’s likely not worth it.
They’re not always run by Internet companies. Sometimes, there are services run locally by people who do the searching for you. These services are NOT worth paying for. By doing the research yourself, you will be able to determine what you qualify for.
Finding scholarships is easier than ever thanks to the Internet. Here are some real sources where you can find scholarships:
- http://scholarships.com and http://cappex.com have databases that allow people to upload their scholarships. There are many real scholarships on these sites, however it’s up to you to vet them and make sure they’re for real.
- Your local library. Libraries have a lot of pamphlets to be distributed, and often times they have scholarship lists specifically for people from your county or state.
- Your high school or community college. They often have these same pamphlets. Asking an academic advisor may help, as well.
Don’t fall victim to this scam! It’s easy to get caught up in.
Scholarship Application Preparation
Many real scholarships are very competitive, often only taking the best applications. There are those that require a high GPA or test scores. Also, there are some that require some sort of submission, such as an art piece or an essay.
There are services out there that will fill out the application for you to give you a better chance at winning the prize. Services like these will write essays and enter competitions for students.
Do NOT use these services! Many of them are scams, looking to milk money from students who want award money. Some of them WILL actually fill out an application, however there are consequences.
If you are found out to have cheated, the scholarship committee will rescind your application and you will not be awarded any money. You will lose the money you paid for the service, and you could face more serious charges such as fraud. Since there are thousands of dollars at stake, the consequences could be dire.
How To Detect Scholarship Scam
If they make you pay. No legitimate scholarship requires an application fee, because having any fees associated with it at all completely negates the purpose of a scholarship! Seriously, any payment beyond postage should not be required.
If there is any purchase required to apply. Some large food companies such as Coca Cola offer scholarships, however you do not need to purchase a can of Coke just to apply. Any scholarship that requires you to buy anything is not likely to be legitimate. Some scholarships require membership in an organization, but if it’s a lesser-known for-profit organization, it’s unlikely to be legitimate.
If there is a required seminar. If you need to attend some event in order to apply, then the scholarship is likely not legitimate. This doesn’t apply to scholarships which require the completion of an exam, such as the National Merit Scholar (NMS). The seminar itself is likely to be a pitch to some sort of loan, or they will pitch you to pay an application fee. Either way, if it looks as if you will have to pay, then it’s probably a scam.
If you get an award that you did not apply for. Many times, kids will get a letter in the mail saying that they were selected among a pool of students to be entered for an award. It’s likely completely untrue and it’s probably trying to get you to sign up for offers. If you’re unsure, though, do your research on google.
If they want your credit card information. Beware! These might be thinly veiled credit card scams, looking to prey on unsuspecting students. If any website that seems like a scholarship application form tries to get you to put in your info, leave that site!
If they want any bank account information. This is another scam. Most scholarships will either (1) send you a check in the mail, or (2) need you to go through the school so they can pay the school directly. Some do offer direct deposit, however you must actually apply and win the scholarship before then. As always, do your research before giving out any information!
If there is no way to find the source of the scholarship. We have always said to do your research, but if nothing can be found at all for it, then it’s likely not legitimate. Sometimes, the information is not available on the Internet but rather your local library, especially if the fund providing the scholarship is local from a family or small business.
If it seems too easy. Just think about it: if it seems too good to be true, it probably is. Keep your eyes open and use your gut. If it simply doesn’t feel right, it probably isn’t.
What To Do If You Think You’re A Victim
Many people fall prey to scams and then, when they find out they’ve been scammed, they do nothing about it. This is not the right way to go, and we want to help you fix your problems.
First, don’t panic. Your information might not yet be in the wrong hands, and there might be a way for you to get your money back.
If you paid via credit card, the easiest way to get your money back is via a chargeback through your credit card company. To initiate a chargeback, contact the bank that issued your card. They will them give you a form to fill out, or they will allow you to do it over the phone. Explain that you have fallen victim to a scam and you need to get your money back.
If you gave up any sensitive information, you may consider getting help from an identity theft company such as Lifelock. By signing up for one of these companies, they can help you in case your information pops up on a public forum, or if the information was used to take out a loan, open a credit card, or create a new bank account.
From there, what you’re going to want to do is open a claim with the FTC. By filing a complaint, you may be able to get the people responsible for the scam to close it down.
How To Avoid Scholarship Scams
Use trusted websites only. Here’s a link to our guide for scholarships, including some real websites that offer real scholarships.
Do your research. If you Google “scholarships for high school students” you’ll find many legitimate sources. However, if you then take the name of the websites you found, and then Google “(name of scholarship) scam”, you should find out whether or not it’s legit.
If you think you have found a fake scholarship, you should report it to the FTC. By reporting it, you stand a chance of being responsible for saving the pocketbooks of many who might end up falling victim to the scam. Here are some instructions on how to do this.
Search for “hook” phrases, such as:
- “You’ve been selected” for a scholarship that you have never entered
- “Money back guarantee”
- “All you have to do is pay a processing fee.”
- “You can’t get this anywhere else”
These hook phrases are commonly used by businesses, and scholarships should not seem like businesses!
How To Spot a Real Scholarship
If you’ve read through the article and are concerned that everyone is out to scam you, you don’t need to fret. There are some tell-tale signs that a scholarship is likely to be legit, as well.
- If the scholarship is run by a large company or well-respected organization. Google and the Horatio Alger Foundation are two big scholarship sources for many students. They’re well known for providing them and they have a long history. You need to look for history behind funds and organizations. Some of them have legitimate sounding names but without doing your research, you can’t know.
- If you can contact a school and they can confirm that the scholarship is legitimate. Schools do not know everything, however, and you might end up getting a scholarship that a particular school has never seen. But if a school can let you know with certainty that you are applying to something real, then you can rest easy.
- If the scholarship is competitive. Fake scholarships are often not set up to seem competitive, and are more often to seem guaranteed or easy. If it’s got a reputation for being difficult to earn, then it’s likely legit.
These are the best signs to determine whether or not a scholarship is for real. However, keep in mind that there are still many unscrupulous people out there who will try their best to make it look like they have a winner.
That’s all for this article. Be sure to like us on Facebook and share this post if you think it helped you!