How to Avoid Scholarship Scams 2021?

ElitePersonalFinance
Last Update: February 10, 2021 College Students Scams Scholarship

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 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, and others are only found in catalogs or known through word of mouth.

Scholarships scams often propagate through misinformation. They prey on those who don’t know better or don’t have many 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 schools (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 to trick people into handing over their money.

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 fees, may be an application fee or some processing cost. After a while, they 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 to get as many applicants as possible.

Others are “scholarship search services” that will charge you to find a scholarship on their website. They will also request that you pay them a ‘finder’s fee’ to search for scholarships 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 maybe 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

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 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 to be eligible. Some real scholarships DO hold seminars, but they are never mandatory. Said seminars tend to pitch for something else, so beware!
  • They ask for bank or credit card info to ‘reserve’ your scholarship. Please do not give them your information! 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 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 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 seen publicly, whether on the Internet, at your library, town hall, or school.
  • They use high-pressure sales tactics on their web page.
  • 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.

Internet companies do not always run them. 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:

  • Search 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 many pamphlets to be distributed, and often 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 adviser 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. Some require a high GPA or test scores. Also, some require submissions, such as an art piece or an essay.

There are services out there that will fill out the application 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 with it completely negates a scholarship’s purpose! Seriously, any payment beyond postage should not be required.

  • Suppose there is any purchase required to apply

Some large food companies such as Coca-Cola offer scholarships; however, you do not need to purchase Coke’s can to apply. Any scholarship that requires you to buy anything is not likely to be legitimate. Some scholarships require membership in an organization, but it’s unlikely to be legitimate if it’s a lesser-known for-profit organization.

  • Suppose there is a required seminar

If you need to attend some event to apply, then the scholarship is likely not legitimate. This doesn’t apply to scholarships that require completing an exam, such as the National Merit Scholar (NMS). The seminar itself is likely to pitch to some 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. Often, 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!

  • Suppose 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!

  • Suppose 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 only doesn’t feel right, it probably isn’t.

What to Do if You Think You are 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.

The easiest way to get your money back would be via a chargeback through your credit card company if you paid via credit card. To initiate a chargeback, contact the bank that issued your card. They will then give you a form to fill out or 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 might consider getting help from an identity theft company. By signing up for one of these companies, they can help you if 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 total 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.”

Businesses commonly use these hook phrases, 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.

  • Suppose a large company or well-respected organization runs the scholarship

Google and the Horatio Alger Foundation are two significant scholarship sources for many students. They’re well known for providing them, and they have a long history. You need to look for the 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

However, schools do not know everything, 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 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.

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