For students, knowing the difference between
legitimate scholarship opportunities and scams can sometimes be
overwhelming and confusing. Every year an estimated 350,000 students and
families are victims of scholarship scams, costing more than $5 million annually.
Free scholarship money is always great, but sometimes offers are just too good
to be true.
When conducting your scholarship search, be on the
lookout for these five common scams, so you can protect yourself and your
money.
1. Cash up front: If you see a scholarship offer
that requires you to send in an application or processing fee, this so-called
"scholarship" is almost always a scam. Even if the offer adds a
disclosure statement that guarantees a refund, money you send up front is almost
never returned.
Application fees are unfortunately one of the most
popular scams and deceive thousands of students each year. To protect
yourself from these scams, just remember four magic words: never pay a fee!
Scholarships are charitable contributions that are supposed
to help your financial status—not hamper it. Also, beware of loan opportunities
that offer a very low-interest loan in return for a small up-front fee. These
loans almost never materialize.
2. Free seminar: You may get an invitation or
E-mail inviting you to attend a free seminar offering advice on financial
aid and providing other helpful knowledge. While this may sound appealing,
it's often a trap.
Instead of providing you with credible information, the
seminar turns out to be a crafty sales pitch that tries to sell you insurance,
annuity, and investment products. Worse, these seminars may try to rope
students into overpriced student loans or expensive scholarship matching
services.
In order to prevent being sucked into this trap, do your
homework and always research the seminars. If you are unsure about the
legitimacy, call the company or your college financial aid office. If
there is no number listed for the company hosting the seminar, this is a huge
warning sign.
Also, beware of scholarship matching services that guarantee
you'll win a scholarship or you'll get your money back. These are most likely
not legitimate and should be ignored. Save your time and money and research
scholarships and financial aid with people you trust.
3. Rewards without entries: You may have seen
pop-up ads that scream, "Congratulations! You have just won a $10,000
scholarship to college! To obtain your reward, please send in a $100 processing
fee." If you did not apply for a scholarship or enter in a specific
contest for this money, this is probably a scam.
Never send in a processing fee to a questionable source.
Scholarships are rewards for those who do the work, not prizes for doing
nothing. As my economics professor always says, "There's no such thing as
a free lunch."
If you did not work hard to apply for this scholarship, but
it still offers thousands of dollars in cash just for sending in a processing
fee, it should not be taken seriously.
4. Time-sensitive scholarships: Time-sensitive
scholarships do not mean scholarships with deadlines. Nearly all
scholarships have a certain date by which an applicant must complete and submit
their application. In contrast, time-sensitive scams are on a
first-come-first-served basis.
Most of the time these scholarships claim to be available
only for the lucky applicants who get in first, and are paired with unsolicited
offers of scholarship money—a sure sign of a scam. If it's a legitimate
scholarship, all of the applicants are applying on a level playing field at one
time.
In addition, time-sensitive scholarships often lure students
in by claiming you are "pre-qualified" based on certain criteria such
as family income, academic achievement, cultural background, community service,
handicaps and disabilities, or religious affiliations. While this may sound
legitimate, it's not.
Legitimate scholarships have so many qualified applicants
that they almost never extend offers to people who did not search them out
initially. Make sure to do your research when checking how you may
"qualify" for a scholarship.
5. Sweeping claims: Lastly, be aware of scholarship
offers that make sweeping claims. If you see an offer that declares any of the
following, stay away.
• "The scholarship is guaranteed or your money
back." In life, and in the financial assistance realm, nothing is
guaranteed. Do not let this line fool you!
• "You can't get this information anywhere else."
If you can't get information about this scholarship anywhere else, then chances
are it is not legitimate. Popular search sites such as Fastweb and
CollegeNet are databases filled with scholarships. If the scholarship isn't
listed on one of these resources, then be very cautious.
• "To hold the scholarship for you, I need your bank
account number or credit card." Legitimate scholarship funds are usually
paid by check or sent directly to your college. Providers should never need
this information.
• "This scholarship will cost you some money." No,
it won't! Scholarships are supposed to be giving you money for college, not
taking it away.
Don't be discouraged—there are thousands of legitimate
scholarships and sites that are dedicated to helping you. Just make sure to
always research the scholarship to which you are applying, never send in money,
and be cautious of offers that seem too good to be true. For even more
information, turn to the U.S. Department of Education's Federal Student Aid
Office for an excellent article
on avoiding scams.
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